AstraZeneca has approached rival drugmaker Gilead Sciences about a potential merger, according to sources, in what would be the biggest health-care deal on record.
The UK-based firm contacted Gilead last month about a possible tie-up but AstraZeneca didn’t specify terms for any transaction.
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 sources added.
AstraZeneca, valued at €124bn, is the UK’s biggest drugmaker by market capitalisation and has developed treatments for conditions from cancer to cardiovascular disease.
However, the Oxford University team in charge of developing a coronavirus vaccine said a decline in the infection rate will make it increasingly difficult to prove whether it’s been successful, the Telegraph newspaper reported.
“It’s a race against the virus disappearing, and against time,” Professor Adrian Hill, director of the university’s Jenner Institute, told the newspaper. “We said earlier in the year that there was an 80% chance of developing an effective vaccine by September. But at the moment, there’s a 50% chance that we get no result at all,” he said.
Prof Hill said he expects fewer than 50 of the 10,000 people who have volunteered to test the vaccine trial in coming week to catch the virus. If fewer than 20 test positive, the results may be useless, the newspaper cited him as saying.
Gilead, worth €85bn, 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 sources said.
Gilead’s share price has climbed 18% this year as its antiviral drug for Covid-19, Remdesivir, worked its way through clinical trials.
The stock is still more than a third lower than its 2015 highs.
The 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 US 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 €6.8bn in 2022.
Pakistan’s AGP, a partner of Mylan, plans to sell the treatment Remdesivir, which has been shown to improve recovery of coronavirus patients, within one to two months in the Asian nation.
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.
Chief executive Daniel O’Day has said the company may spend €885m on the treatment this year alone.
AstraZeneca, led by CEO Pascal Soriot, is helping to manufacture a Covid vaccine developed at the University of Oxford.
The US has pledged as much as €1bn to support the efforts as part of Operation Warp Speed, a push to secure vaccines for America.
The shot is expected to enter phase III clinical trials in June.
Health-care deal-making has been a rare bright spot as the global pandemic and resulting lockdowns have doused the market for mergers and acquisitions.
Global M&A volumes are down about 45% this year, according to data compiled by Bloomberg, and announced deals have been falling apart at a steady pace.
Excluding minority investments, deal-making in April and May barely topped €85bn in total, the data show, the lowest two-month period in at least 22 years.
AstraZeneca is no stranger to large-scale, politically sensitive M&A.
In 2014, it fended off a €104bn approach from Pfizer, a deal that attracted attention from US lawmakers as it would have allowed New York-based Pfizer to lower its tax bill by re-domiciling in the UK.
Its shares are up 11% since the start of the year, boosted by positive data from trials of its blockbuster lung cancer drug Tagrisso.
Meanwhile, drugs firm Moderna named a new chief financial officer as the biotechnology’s coronavirus vaccine moved ahead in wider testing that will determine how safe and effective it is.
David Meline, who served as Amgen's CFO from 2014 to 2019, will take over the top finance role at the drugmaker at pivotal moment. Not only is the company leading the race to develop a vaccine to prevent Covid-19 infections it’s also come under scrutiny as executives have sold millions of dollars worth of the firm’s highly-valued shares.