British drugmaker AstraZeneca (AZ) is reportedly in talks to merge with U.S. company Bristol Myers Squibb (BMS).
According to foreign media including the Financial Times (FT) on the 3rd (local time), the two companies have been discussing the possibility of a merger for the past several months. If the merger goes through, it would create the world's largest pharmaceutical group, with a corporate value of about $400 billion (about 577 trillion won).
Each company has its own growth tasks behind the merger review. AstraZeneca is aiming to reach $80 billion (about 114 trillion won) in annual sales by 2030, and to do so it needs to expand its presence in the United States, the world's largest pharmaceutical market.
BMS urgently needs to secure a new growth engine, as the synergy with U.S. company Celgene, acquired for $74 billion in 2019, has fallen short of expectations and key drugs are approaching patent expirations.
AstraZeneca currently has a market capitalization of £196 billion (about 382 trillion won), making it the second-largest listed company in the United Kingdom. BMS has a corporate value of about $133 billion (about 192 trillion won). If this transaction is completed, it is expected to rank among the largest mergers and acquisitions (M&A) in the history of the pharmaceutical industry.
However, the chances of success remain unclear. The biggest obstacle is that the companies' core oncology portfolios overlap significantly. BMS's immuno-oncology drug "Opdivo" and AstraZeneca's "Imfinzi" compete directly in the Non-small cell lung cancer (NSCLC) treatment market.
Because of this, regulators in the United States and the United Kingdom may block the merger over monopoly concerns or demand stringent conditions such as the sale of certain business units.
AstraZeneca and BMS have not issued official positions regarding the merger talks.