$74bn Pharmaceutical Merger Announced By Bristol Myers & Celgene

A block buster and record making merger has been announced by two of the biggest drug companies of the United States.

Drug maker Celgene would be taken over by Bristol-Myers Squibb in a cash and stock deal including debt and the value of the deal as announced is worth about between $74bn and $90bn.

The deal is expected to create a very large portfolio of cancer-fighting drugs which is the speciality of both the companies after the merger which is subject to a number of regulatory approvals in various parts of the world and is expected to be completed in the second half of 2019.

According to analysts, both the companies have been facing increased market pressure which was a major driver for the deal between the two companies.

The New Jersey based Celgene generated more than $11.2bn in global sales in the first nine months of 2018 which was a growth of about 18 per cent compared ot the same period a year before.

However the company is fighting hard to hold on to its patent for Revlimid which is a cancer drug and one that accounts for about 60 per cent of its total sales and revenues.

On the other hand, the New York headquartered Bristol Myers was able to generate revenues of more than $16bn in the first nine months of 2018 which was 8 per cent more than the comparable period a year ago. The company has also been under pressure in recent times because of research setbacks related to Opdivo which is the leading cancer medicine of the company.

The deal would take his company to the “next chapter,” said Bristol chief executive Giovanni Caforio.

After the merger, the new entity would have a portfolio of nine medicines – each of which generates more than $1bn in sales every year.

The new entity would also have in its pipeline a large range of drugs in development which includes six drugs that could be launched in the market within the next one to two years and they would have a combined revenue producing potential of $15bn.

“This deal is really all about the launches,” Mr Caforio said on a call with financial analysts. “Given the number of short-term launches and growth opportunities, we believe this is the right time.”

He was confident about the valuation because his team had reviewed the Revlimid patent outlook, he added.

According to the deal announced, Celgene was value at more than 50 per cent higher compared to market value before the merger announcement.

However, the shareholders of Bristol were apparently unconvinced as the shares of the company fell by 12 per cent after the announcement. On the other hand, there was a jump of 25 per cent in the shares of Celgene.

After completion, 69 per cent of the new company would be owned by Bristol shareholders while the remainder would be owned by Celgene shareholders.

(Adapted from BBC.com)

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