Bristol-Myers Squibb said on Thursday it would buy Celgene Corp. for about $74 billion, creating a major pharma company with several blockbuster cancer drugs as competition in the immunotherapy space heats up.
Bristol-Myers pioneered immunotherapy with its Yervoy and later Opdivo, but has come under pressure as Merck & Co.’s rival treatment Keytruda moved ahead in market share in lung cancer treatment, the most lucrative oncology market.
The deal will create a company with nine treatments bringing in more than $1 billion in annual sales and a significant potential for growth in oncology, immunology and inflammation and cardiovascular disease.
Talks opened in September, with Bristol-Myers approaching Celgene, according to a source familiar with the matter.
BMO Capital Markets analyst Alex Arfaei said the deal addresses a priority for Bristol to diversify from immunotherapy, calling the acquisition opportunistic but expensive.
“This proposed deal does not send a confident signal about Bristol’s independent growth prospects,” Arfaei said in a client note.
Increasing competition for main cancer treatments of both companies and clinical setbacks last year have resulted in investor concern over their future prospects.
Shares of Celgene have lost 38.6 percent of its value in 2018, while those of Bristol-Meyers have shed 15.2 percent.
Last year, Celgene bought experimental cancer drug developer Juno Therapeutics for $9 billion, betting on its chimeric antigen receptor T-cell therapy, known as CAR-T, in a bid to reduce reliance on its mainstay drug, Revlimid.
Bristol-Myers shares fell 9.5 percent, to $47.10, while Celgene shares rose 33.5 percent, to $88.95, in premarket trading.
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