Bristol-Myers Squibb and Celgene Join Forces in the Fight Against Cancer

Bristol-Myers Squibb, a pioneer in the field of cancer immunotherapy, signed the largest M&A operation ever concluded in the pharmaceutical sector in January 2019 when it acquired Celgene, a US biotechnology company, for $74 billion. In 2050, it is estimated that 80% of drugs will come from biotech, therefore this represents a strategic investment.

A dynamic market

This takeover gave birth to a giant in cancer treatment. "The transaction will create a company specializing in advanced biopharmacy meeting the needs of patients with cancer, inflammatory, autoimmune and cardiovascular illnesses using innovative drugs," says BMS.
In 2018, Celgene bought competitor Juno Therapeutics for $9bn. The latter is a specialist in the treatment of leukemia. These are historical acquisitions according to Rafi Mardachti, CEO of Universal Medica Group, a consulting company in the pharmaceutical industry. He believes that "most biotech laboratories are fated to be bought up by big companies."
BMS was forced to announce in June that it was divesting Otezla, following scrutiny by American competition authorities because of the sums of money involved. Otezla is Celgene's treatment for psoriasis. This was almost a stmbling block and caused the postponement of the merger. Indeed, this new patent assignment must also be examined by the Federal Trade Commission (FTC). The case has surprised many analysts, such as Michael Yee at Jefferies, an American investment bank. He sees in it “the sign of greater intransigence on behalf of the American competition authority.” Is it intransigence? Or are the authorities taking charge of the issue? In 2018, Otezla generated revenues of $1.6 billion. Originally scheduled for the third quarter of 2019, the delay, in the transaction troubled Wall Street, where shares in BMS dropped 4.2% and those in Celgene fell 3.2%.

Many blockbuster drugs

That BMS could afford such an acquisition was something of a surprise as it had been going through a rough in the run up to the deal. With a peak at more than $145 in early 2017, its price fell 30% in a month after the failure of GED-0301. GED-0301 was a Crohn's disease treatment which was in the final stages of clinical trials. Celgene had acquired the rights to this drug from Nogra Pharma for more than $700 million. It was a hard hit that was followed by another, with the questioning of the patents of its lenalidomide molecule, whose product, sold as an anticancer under the brand Revlimid, is a derivative of thalidomide. Some generic manufacturers have mounted a legal challenge to obtain its intellectual property rights. The merged company will have a stable of eight blockbuster drugs (each generating more than $1bn in annual revenue).
The judicial climate did not scare BMS. The merged company will account for eight blockbuster drugs (each generating more than $ 1 billion in annual revenues) in oncology, inflammatory and cardiovascular illnesses, as well as six drugs that could potentially generate an additional $15bn. Things are looking bright, unless Celgene's bad luck rubs off on its new partner, that is.