Several pharmaceutical companies announced acquisitions in January, including Bristol-Myers Squibb, which has agreed to acquire Celgene in one of the largest mergers in the pharmaceutical industry’s history, and Eli Lilly and Co., which has agreed to acquire Loxo Oncology Inc.
The cash-and-stock deal between Bristol-Myers Squibb and Celgene — approved by both companies’ boards of directors — is valued at approximately $74 billion. The companies expect to complete the transaction in the third quarter of this year.
“Together with Celgene, we are creating an innovative biopharma leader, with leading franchises and a deep and broad pipeline that will drive sustainable growth and deliver new options for patients across a range of serious diseases,” Giovanni Caforio, MD, chairman and CEO of Bristol-Myers Squibb, said in a press release issued by the two companies. “As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation.
“We will also benefit from an expanded early- and late-stage pipeline that includes six expected near-term product launches,” Caforio added. “Together, our pipeline holds significant promise for patients, allowing us to accelerate new options through a broader range of cutting-edge technologies and discovery platforms.”
Under the agreement, Celgene shareholders will receive one Bristol-Myers Squibb share and $50 cash for each share of Celgene. Celgene shareholders also will receive one tradeable contingent value right for each Celgene share. Contingent value rights entitle holders to receive payment for achievement of future regulatory milestones, according to the press release.
Executives with both companies suggested the transaction will create a leading specialty biopharma company well-positioned to address the needs of patients with cancer, cardiovascular disease, and inflammatory and immunologic disease.
“Mergers between health care organizations are usually about gaining market share and, therefore, more negotiating power with payers and government,” Barbara Zabawa, JD, MPH, clinical assistant professor in the College of Health Sciences at University of Wisconsin-Milwaukee, told HemOnc Today. “This, of course, can lead to bigger profits.
“As a for-profit company, the boards of directors for these merging organizations have a fiduciary duty to the shareholders to ensure that the companies do well financially,” Zabawa added. “Combining assets and research resources may help with finding solutions faster because the organization has more resources to tap into, but it can also mean more lobbying power to get drugs approved that might not otherwise be approved.”
The combined company would have nine products with more than $1 billion in annual sales. The portfolio would consist of several key oncology therapeutics, including the PD-1 checkpoint inhibitor nivolumab (Opdivo, Bristol-Myers Squibb), the CTLA-4 immune checkpoint inhibitor ipilimumab (Yervoy, Bristol-Myers Squibb), and the immunomodulatory drugs lenalidomide (Revlimid, Celgene) and pomalidomide (Pomalyst, Celgene). Other key therapeutics include abatacept (Orencia, Bristol-Myers Squibb), apremilast (Otezla, Celgene) and apixaban (Eliquis; Bristol-Myers Squibb, Pfizer).