Analysts question rationale for pairing two large oncology portfolios
AstraZeneca is in discussions to acquire US rival Bristol Myers Squibb, according to people familiar with the matter, in a transaction that would rank among the largest pharmaceutical deals ever. The talks were first reported by the Financial Times. Sources cautioned there is no certainty the deal will be concluded.
AstraZeneca had a market value of nearly £196bn before the news, making it the second-biggest listed company in the UK. Bristol Myers Squibb, headquartered in Princeton, New Jersey, and known for its cancer treatments, is valued at $133bn. A combination would create the world’s fourth-largest drugmaker by market value.
AstraZeneca’s FTSE 100-listed shares fell more than 7% to a low of £116.46 in early trading in London as investors reacted to the reports.
Analysts questioned the rationale and warned that the companies’ overlapping oncology portfolios would invite intense regulatory scrutiny. A deal would expand AstraZeneca’s presence in the US, where it is already investing $50bn in research and manufacturing by 2030. AstraZeneca completed a direct listing on the New York Stock Exchange in June, and a deal with Bristol Myers Squibb could revive concerns about a strategic shift away from the UK.
Analysts at Jefferies, led by Michael Leuchten, said the strategic case was unclear. “Why is perhaps not yet clear to us,” they wrote, adding that most would focus on “the potential to establish an even bigger oncology powerhouse, with the resultant portfolio likely the broadest in the industry.” They added that “beyond the regulatory hurdles we would argue that pipeline assets could be sourced elsewhere, as AstraZeneca has been doing, particularly in China.”
Chris Beauchamp, chief market analyst at the investment platform IG, said the deal “risks the departure of yet another national champion” and that “the pair’s large cancer divisions is a major hurdle to a successful deal.” Beauchamp said Bristol Myers Squibb “has struggled since 2023” and that “some Astra shareholders will wonder at the need to do expensive M&A when their shares are doing so well.”
John Murphy, a senior pharma analyst at Bloomberg Intelligence, said the deal made “limited strategic sense” for AstraZeneca. “Their growth outlooks are very different – double-digit earnings gains are forecast at Astra through 2030, with Bristol set for continued declines, due to multiple patent expiries – and, while both are focused on developing promising pipelines, history suggests such megamergers hamper pipeline progress,” he said. Major cost savings from eliminating overlapping infrastructure were an obvious potential benefit, Murphy said, but “would suggest reduced confidence at Astra in its pipeline and growth outlook.”
AstraZeneca, headquartered in Cambridge, was formed in 1999 from the merger of Swedish company Astra AB and UK company Zeneca Group, which had been spun off from Imperial Chemical Industries five years earlier. Its share price has more than quadrupled during Chief Executive Pascal Soriot’s tenure, during which the company overtook UK rival GSK in size and fended off a hostile bid from Pfizer in 2014 that valued AstraZeneca at almost £70bn before rebuilding its pipeline with cancer immunotherapies and other treatments.
Last week, AstraZeneca said it was confident of hitting its growth targets for 2030, by which it expects to achieve $80bn in annual sales, up from $59bn last year, despite the surprise failure of Wainua, one of its leading heart disease drugs in development. Soriot said the company must move at “Chinese speed” to ensure it does not fall behind competitors.
Bristol Myers Squibb recently beat Wall Street expectations with its second-quarter results and lifted its 2026 outlook, reporting revenues of $12.97bn during the quarter, up 5% from a year earlier excluding currency movements. Its UK research team is based at Moreton on the Wirral peninsula near Liverpool, while its commercial head office for the UK and Ireland is in Uxbridge.