American drug giant Pfizer's plan to create the world's biggest pharmaceutical firm was thwarted on Monday when British medicine manufacturer AstraZeneca turned down Pfizer's offer of $119 billion.

Pfizer is the second-largest pharmaceutical company in the world when it comes to revenue, while AstraZeneca is eighth.

In thumbing down Pfizer's offer, AstraZeneca's board said the planned buy-in is "an opportunistic attempt to acquire a transformed AstraZeneca without reflecting the true value of its exciting pipeline."

The board added that the British drugmaker has the ability to deliver on its prospects "as an independent, science led business."

BBC said that Pfizer planned to keep its New York office, but would be based in the UK for tax purpose. By using that strategy, Pfizer would enjoy a UK corporate tax rate of 20 per cent versus the U.S. rate of 35 per cent.

Leif Johansson, chairman of AstraZeneca added in a statement, "Pfizer gas failed to make a compelling strategic business or value case." He said he would only recommend to the board the deal if Pfizer would increase its current offer of $119 billion made on Friday by at least 10 per cent more.

However, it seems the market disagreed with AstraZeneca's decision since news of its decision caused shares of the company to drop 13 per cent in early trading.