2019 will be remembered as the year of the pharma mega-merger
2019 continued on very much the same trajectory as it began – as Takeda’s huge merger with Shire closed as the year dawned it became clear that big pharma was not done with acquisitions.
Bristol-Myers Squibb, itself regularly tipped as a takeover target, decided to take a pre-emptive strike and merge with its cancer drugs rival Celgene in a deal worth around $74 billion.
It was the third largest pharma takeover of all time, surpassed only by the merger of Glaxo Wellcome and SmithKline Beecham in 2000 and Pfizer’s buyout of Warner Lambert.
Those deals were worth $111 billion and $168 billion respectively when adjusted for inflation, and as is often the case the path to the Celgene/BMS merger was a tricky one.
Certain shareholders in BMS were not convinced about the merits of the deal – buying Celgene would bring in billions of dollars in annual revenue from blockbuster cancer drug Revlimid, but these could be threatened by generics in a few years’ time.
AbbVie and Allergan
Midway through the year news broke of another game-changing deal between two of the biggest pharma companies – AbbVie and Allergan. AbbVie is already known as an acquisitive pharma company – it is cash-rich thanks to the blockbuster revenues from its inflammatory diseases drug Humira. But it also needs new revenues as Humira is off-patent in Europe and threatened by a gang of biosimilar competitors in the US from 2023 onwards. AbbVie had been content with small “bolt-on” buys for years after a big merger with Shire fell through in 2014. The merger solves problems for both companies – allowing AbbVie to diversify its portfolio of products, adding $16 billion in revenues to its top line.