Drug companies Pfizer and Allergan are reportedly considering the move to combine their business in what would be a blockbuster merger.

According to sources familiar with the situation, Pfizer recently approached Allergan regarding a takeover, though one of the sources said that it is early on in the process and an agreement may not materialize.

Pfizer has a market cap of $219 while Allergan's stands at $113 billion. A combined company would have a market cap of $332 billion, with the deal for Allergan, if it pushes through, to become the biggest takeover for a year that has been on pace to end as the busiest ever in terms of mergers and acquisitions.

The completion of such a merger would have to go through certain challenges, however, with one of the major hurdles being the price of such an acquisition for Pfizer. While Pfizer CEO Ian Read said that he has noticed decreasing prices of shares for rival drug makers, he added that he is not sure if the leaders and investors of the companies have adjusted what they think they are worth if such a transaction would be presented.

Other possible challenges to the merger include how much Pfizer is willing to lay off workers and shut down facilities, the future of Allergan CEO Brent Sanders and how the management team of the combined company would be filled.

If Pfizer and Allergan would agree to a merger, Pfizer would be adding Botox, Restasis and other popular drugs by Allergan to its portfolio of patent-protected drugs. Pfizer has recently been looking to improve its arsenal of branded drugs, especially after its recent $16 billion acquisition of Hospira which bolstered its business of off-patent drugs.

In addition to its purchase of Hospira, acquiring Allergan could open allow Pfizer to finally realize a plan that executives have long been thinking of. The plan is to separate the company into one business that sells patent-protected medicine and one business that sells off-patent drugs.

Acquiring Allergan would also boost the growth of Pfizer, as Pfizer's 6 percent growth rate is lower compared to the 10 growth rate reported by Allergan in the most recent quarterly earnings report. The merger could also lower the corporate tax of Pfizer, which is based in New York. Allergan is based in Dublin, where the tax rate is much lower compared to the United States, and Read has discussed how the high United States tax rate has been placing Pfizer at a disadvantage compared to its foreign rival drug makers.