A possible merger between two of the world’s biggest pharmaceutical companies has been ruled out, according to reports in The Times today.
Bloomberg had reported on Sunday that AstraZeneca plc had made a “preliminary approach” to rival Gilead Sciences about a potential merger last month, a move that would have represented the biggest healthcare merger ever, creating a company worth some $200 billion.
UK-listed, Cambridge-based AstraZeneca, valued at £110 billion, recently overtook Royal Dutch Shell to become the UK’s largest company by market value, and is a major hirer of contractors in the UK. The pharmaceutical giant has been at the forefront of efforts to develop a Covid-19 vaccine, collaborating with vaccinologists at the University of Oxford, which, if successful, could boost the company’s revenue significantly.
NASDAQ-listed Gilead is based in Foster City, California. The firm developed the broad-spectrum antiviral drug remdesivir, originally developed to treat hepatitis C, that is currently undergoing trials to determine if it is an effective treatment against Covid-19. The drug has received emergency authorisation by the US Food & Drug Administration, the Indian CSDCO, and is approved for use in Japan for people with severe symptoms. Hopes for remdesivir have boosted Gilead’s share price, which is down by a third since 2015. At the close of trading on Friday the firm was valued at about $96 billion (£74 billion).
However, sources told The Times that AstraZeneca is thought to have ruled out a deal because it would have distracted it from developing its own drugs pipeline, including promising oncology drugs, and from its attempts to produce a successful coronavirus vaccine. There was also scepticism that such a huge merger could be arranged because ongoing lockdowns present substantial logistical problems.
One healthcare M&A banker who has worked on deals with Astrazeneca before told The Times that the approach was “odd timing” and “not the most obvious deal in the world”. Astrazeneca and Gilead declined to comment.
8th June 2020.
