UK's AstraZeneca eyeing $400b merger, report says

The United Kingdom's second-most valuable listed company, pharmaceutical firm AstraZeneca, has been revealed to have been holding talks for some time with United States-based rival Bristol Myers Squibb, or BMS, about a merger, which could result in a global pharma giant worth nearly $400 billion.

The Financial Times reports that talks have been taking place for some months, although a deal is not yet thought to be close. If the merger between the British company, valued at $264 billion, and its US counterpart, worth around $133 billion, goes through, it would result in the global drug sector's fourth-largest company.

AstraZeneca declined to comment and BMS did not immediately respond to requests for comment, according to the FT.

Around the world, AstraZeneca generated $58.7 billion last year, and it has set itself a target revenue figure of $80 billion by 2030, which is why it is so keen to make further inroads into the US market, which already accounts for almost half of its revenue.

Key role

But the company's involvement in China will also play a key role in efforts to reach that target, especially since in January this year, during then-prime minister Keir Starmer's visit to China, AstraZeneca announced investments worth $15 billion in China up until 2030, to expand its medicine manufacturing and R&D.

Pascal Soriot, AstraZeneca's CEO, said the investment, which will see existing manufacturing facilities in Wuxi, Taizhou, Qingdao, and Beijing developed, plus the establishment of other sites yet to be revealed, "begins an exciting next chapter for AstraZeneca in China, which has become a critical contributor to scientific innovation, advanced manufacturing, and global public health".

In 2014, the US drug company, Pfizer, made a bid for AstraZeneca valuing the drugmaker at around $94 billion, when its reputation had suffered after the late-stage clinical trial failure of several drugs. Soriot was one of those who rejected the bid, and in the subsequent years, under his stewardship, the company's reputation and finances have been restored, with its cancer treatment drugs performing particularly well.

If a deal is reached between AstraZeneca and BMS, however, that would not necessarily be the end of the story, as such a merger would be subject to both political and business scrutiny.

Given that BMS also has a significant cancer division, antitrust scrutiny may be applied to the companies' combined presence in the cancer drug market, and there could also be concerns in the UK that AstraZeneca may use a major trans-Atlantic deal to relocate the heart of its business from its current headquarters in Cambridge, England.

julian@mail.chinadailyuk.com