By merging with Celgene in a record $74 billion deal, Bristol-Meyers will create a formidable organization in the competitive immunotherapy space.
Together Bristol-Myers and Celgene, both of which focus on cancer, produce nine drugs with annual sales of more than $1 billion each. Celgene has invested heavily in immunotherapy, a very active area of cancer research and Bristol-Myers’s biggest line of business.
Bristol-Myers’s top product is Opdivo, one of the first immunotherapy drugs targeting cancer. It accounts for about a quarter of the company’s sales, but faces a threat in Keytruda, a competing immunotherapy drug from Merck. Acquiring Celgene will give the pharmaceutical industry giant control of Revlimid, one of the most successful cancer drugs in recent years. Celgene is best known for Revlimid and Thalomid, another cancer drug.
Celgene has been protective of Revlimid, refusing to share samples in order to impede the development of generics. The company cites concerns for patient safety, but it has drawn negative attention from the Food and Drug Administration and Federal Trade Commission, which say the practice is anti-competitive. Celgene has also been criticized for raising the prices of Revlimid and other drugs, and suffered setbacks in its development pipeline, the New York Times reports.
The Bristol-Meyers deal follows a difficult period for Celgene in terms of performance as well. Its share price fell by about 40% in the past year over concerns that it is over-reliant on Revlimid, which accounts for about two-thirds of its sales. Revlimid’s patent is due to expire in October, opening the door to cheaper generic rivals.
Apart from these issues, Celgene grew through acquisitions last year. In January, the firm inked a deal to acquire biotechnology company Impact Biomedicines and expand its presence in the market for blood-disease treatments. This added Fedratinib to its pipeline; the drug gained approval in June. Also in January, Celgene agreed to a $9 billion purchase of Juno Therapeutics, a start-up immunotherapy company specializing in cancer treatments.
Pending shareholder and regulatory approval, the record pharmaceutical industry deal is expected to close in the third quarter. Two members of the Celgene board will join the Bristol-Myers board. Bristol-Myers shareholders will own 69% of the combined entity, with the remaining 31% going to Celgene shareholders.