Bristol-Myers Squibb’s Thursday announcement that it would nab Celgene for $74 billion brought “megamergers back to pharma,” as Credit Suisse analyst Vamil Divan put it in a note to clients. And the return has industry watchers wondering which company will be the next to follow suit.
Plenty of drugmakers could stand to pump up growth, and thanks to U.S. tax reform, they have the funds to do it. Just look at AbbVie, one of tax reform’s biggest winners, which also happens to be moving closer every day to a post-Humira future.
AbbVie certainly isn’t the only one out there with big assets set to wane over the next few years. Amgen is also coming up against biosimilar competition for Neulasta, and Bernstein analyst Ronny Gal has suggested the California company could ease the pain with a buyout of rare-disease focused Alexion. And it’s holding onto $30 billion in cash that it could put toward the cause, Bloomberg notes.
As analysts told the news service, a couple other big players belong on the M&A watch list, starting with Gilead. The Big Biotech has already attempted to mitigate its hepatitis C sales slide with one mammoth deal—its $12 billion pick-up of Kite—but with Kite’s CAR-T sales off to a slow start, it could use another, analysts contend. And they say companies like Clovis Oncology, which is struggling to keep its PARP inhibitor Rubraca competitive against rivals with more marketing muscle, could make a good target.
And then there’s Merck & Co., whose investors seem to be clamoring for some dealmaking action despite the company’s smashing success with PD-1 cancer fighter Keytruda.
Lucky for them, the New Jersey pharma giant’s executives are on board. “Let me start by saying that we’re pleased with the way in which our business is growing now, particularly in the oncology field, but that doesn’t make us comfortable,” CEO Ken Frazier told shareholders on Merck’s third-quarter call in October, adding that, “we have to continue to build our portfolio and build on our pipeline, and that’s why [business development] is an important priority for us going forward.”
Who’s not likely to take a seat the buyer’s table in 2019? Historical megamerger champion Pfizer, according to new CEO Albert Bourla.
“We continue not to see the need for any large-scale M&A activity at this time,” he said on Pfizer’s own third-quarter call.