Bristol-Myers to Buy Big Pharma Rival Celgene

The $74 billion deal could create the fourth-largest U.S. pharma firm, with a portfolio that includes nine blockbuster drugs.
Matthew HellerJanuary 3, 2019
Bristol-Myers to Buy Big Pharma Rival Celgene

Bristol-Myers Squibb said Thursday it agreed to acquire pharma rival Celgene in a deal valued at $74 billion that would expand its portfolio of cancer drugs.

Celgene’s products include cancer blockbusters Revlimid, which generated $8.19 billion in 2017 sales, and Thalomid. Together, Celgene and Bristol-Myers could become the fourth largest pharmaceutical firm in the U.S., making nine products with global sales of more than $1 billion each.

Under the terms of the deal, Celgene shareholders would receive one share of Bristol-Myers stock and $50 in cash for each share, valued at $102.43 per share, or a 53.7% premium to Celgene’s closing price on Wednesday.

“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,” Bristol-Myers CEO Giovanni Caforio said in a news release.

“As a combined entity, we will enhance our leadership positions across our portfolio, including in cancer and immunology and inflammation,” he added.

But investors reacted negatively to news of the deal, driving Bristol-Myers’ stock down more than 15% to $44.50 in trading Thursday.

Leerink analyst Geoffrey Porges suggested Bristol-Myers shareholders could reject the deal “if the Bristol price drop sticks.” If the share price remains near $44, the premium would fall to 41%, he said in a client note.

There may be other concerns for both companies, including, as CNN reports, looming patent expirations for Revlimid that could bring generic competition within four years. The Food and Drug Administration, moreover, has delayed its decision on Bristol-Myers’ application for approval of two of its cancer drugs, Opdivo and Yervoy.

Celgene beefed itself up recently by paying up to $7 billion for biotech firm Impact Biomedicines and $9 billion for Juno Therapeutics, a producer of blood cancer drugs in which it already held a nearly 10% stake.

But in 2018, “Celgene’s share price sank roughly 40 percent, in part because investors felt the company was relying too much on Revlimid, the drugmaker’s biggest seller,” The New York Times said.

Image: Bristol-Myers Squibb