US drugmaker Pfizer Inc raised its offer for AstraZeneca Plc to £63 billion yesterday, but the British company promptly rejected the proposal, which would create the world’s biggest pharmaceuticals company.

Pfizer’s pursuit of AstraZeneca, which would boost the American company’s pipeline of cancer drugs, cut its tax bill and create significant cost savings, comes amid a wave of deal-making in the healthcare sector.

AstraZeneca’s board said it had “no hesitation” in rejecting the proposals, which it believed “substantially undervalue” the company and were not an adequate basis on which to engage with its suitor.

The US group would much prefer an agreed deal with its rival, since hostile takeovers typically take longer, require a higher final price and carry more risks because the bidder cannot access the target’s books to assess its business.

Yesterday’s £50 a share indicative offer follows AstraZeneca’s decision to rebuff an earlier proposal that valued it at £58.8 billion, or £46.61 per share.

“Given where the shares have come from, this doesn’t look unreasonable,” said one fund manager whose institution is among the 10 biggest investors in AstraZeneca.

AstraZeneca shares were trading at around £30 a year ago, but confidence in the company’s cancer drug pipeline has built up strongly since then.

“We expect Pfizer ultimately to have to sweeten its offer based on discussions we have had with investors, many citing a price within the £52-55 range and some above this, and our analysis of the EPS accretion for Pfizer,” said Mark Clark, an analyst at Deutsche Bank.