In the biggest pharmaceutical deal ever, Bristol-Myers Squibb will buy Celgene for $74 billion, combining two the largest cancer drug businesses in the world. Wall Street analysts have questioned whether this merge would solve the individual challenges the two companies face. The companies have stated that the combination would create $2.5 billion in cost savings, as well as significantly increase earnings. Due to clinical setbacks and some other misshaps, Bristol-Myers shares fell 15.2 percent in 2018. Celgene saw its shares nosedive nearly 40 percent last year.
With Merck & Co’s cancer immunotherapy and growth driver Keytruda dominating the market, Bristol’s Opdivo seems to have lost its luster in the oncology market. Thursday saw Bristol’s stock drop another 13.3 percent lower, ending at $45.12. Many shareholders show concern that current drugs in development for the company may not have high enough sales to offset the major products losing exclusivity between 2022 and 2026.
Bristol’s Revlimid, which is expected to make about $10 billion in 2018 in sales, does appear to generate enough cash flow for the company to pay down debt and position for another transaction. Celgene shares rose 20.7 percent.
With the deal, Celgene shareholders will each receive one Bristol-Myers Squibb share and $50 cash for each share held or $102.43 per share. The shareholders of Celgene will also receive a contingent value right payment of $9 if three treatments that are currently in development achieve timely approvals.
What is most important to the two companies in the merger is maintaining sustainability of Celgene’s leardership role in hematology.
Further details into the combination of Bristol-Myers Squibb and Celgene can be found here.
This has defintely set the tone in the biotech industry for 2019 and certainly this week during the largest healthcare industry conference in the world, the JPMorgan Helathcare Conference in San Francisco.
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