Bristol-Myers Squibb to Purchase Celgene

Bristol-Myers Squibb (BMS) agreed to buy Celgene for $74 billion, making it the second-biggest purchase in the pharmaceutical and biotechnology industry and continuing a trend of large mergers and buyouts in health care.

The merged company will have nine products with more than $1 billion in annual sales, including the myeloma drug lenalidomide and the lung cancer drug nivolumab. BMS also expects six product launches over the next two years, five of which will come from Celgene’s pipeline; if approved, these products will represent more than $15 billion in potential revenue. However, shareholders expressed concern that drugs in development would not have enough sales to offset major products losing exclusivity between 2022 and 2026.

BMS said the buyout will lead to $2.5 billion in cost savings by 2022, mostly through cuts in sales, general, and administrative expenses, as well as reductions in research-and-development spending. Conversely, the deal is expected to increase the company’s earnings by more than 40 percent in the first year after the deal closes.

BMS CEO and Chairman of the Board Giovanni Caforio, MD, will continue to serve in the same capacity for the combined company.

Source: The Wall Street Journal, January 3, 2019.