AstraZeneca eyes potential merger with Gilead Sciences
AstraZeneca Plc has made a preliminary approach to rival drugmaker Gilead Sciences Inc. about a potential merger, according to people familiar with the matter, in what would be the biggest health-care deal on record.
The UK-based firm informally contacted Gilead last month to gauge its interest in a possible tie-up, the people said, asking not to be identified because the details are private. AstraZeneca didn’t specify terms for any transaction, they said. While Gilead has discussed the idea with advisers, no decisions have been made on how to proceed and the companies aren’t in formal talks, the people added.
AstraZeneca, valued at $140 billion, is the U.K.’s biggest drugmaker by market capitalization and has developed treatments for conditions from cancer to cardiovascular disease. Gilead, worth $96 billion at Friday’s close, is the creator of a drug that’s received US approval for use with coronavirus patients.
Gilead is not currently interested in selling to or merging with another big pharmaceutical company, preferring instead to focus its deal strategy on partnerships and smaller acquisitions, the people said.
A representative for Gilead declined to comment. A spokesman for AstraZeneca said the company doesn’t comment on “rumors or speculation.”
The overtures show how the pharmaceutical industry landscape could shift at a time when drugmakers are racing to find effective treatments for Covid-19. If a deal goes ahead, it would surpass Bristol-Myers Squibb Co.’s $74 billion takeover of Celgene Corp. last year as the biggest-ever health-care acquisition, according to data compiled by Bloomberg. It would also rank among the 10 biggest M&A transactions of all time.
Shares of AstraZeneca have risen about 41% over the past 12 months, making it the best performer on a Bloomberg Intelligence index of major Western pharmaceutical companies. Shares of Gilead gained about 19% over the period.
Gilead has attracted investor interest as its antiviral drug for
Covid-19, remdesivir, worked its way through clinical trials in recent months. The stock is still more than a third lower than its 2015 highs. The Foster City, California-based company has seen a steady decline in sales in its hepatitis C franchise and is trying to reinvigorate its drug-development pipeline.
Remdesivir, which has an emergency use authorisation from the U.S. Food and Drug Administration, has been shown in some early studies to shorten hospital stays for people with Covid-19. SVB Leerink recently forecast that sales of the drug may reach $7.7 billion in 2022.
Gilead has been dispensing early rounds of the drug for free, leading some investors to question how the company plans to make money from it in the future.