Staying single
Cupid might need to shoot his arrows in another direction, though. There are at least a couple of reasons why a marriage between AstraZeneca and Bristol-Myers could be unlikely to happen.
First, both companies like to play the field quite a bit. While AstraZeneca’s relationship with Bristol-Myers has been close, the British drugmaker’s ties with Merck have been even closer in some ways. The company has also forged alliances with smaller companies, including a deal with ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) for developing cancer drugs using Isis’ antisense technology. But the real merger prospect for AstraZeneca most frequently mentioned of late is Forest Laboratories, Inc. (NYSE:FRX). Several analysts see the company as an ideal fit for AstraZeneca.
Meanwhile, Bristol-Myers and Pfizer Inc. (NYSE:PFE) are joined at the hip with blood thinner Eliquis. The drug, which was approved by the U.S. Food and Drug Administration in December, is expected to be another blockbuster for both companies. Bristol-Myers also has had an alliance in the past with Sanofi SA (ADR) (NYSE:SNY), but that relationship appears to be winding down with loss of patent exclusivity for Plavix in several markets. As with AstraZeneca, other smaller companies have been rumored as targets for Bristol-Myers.
The second reason this marriage might not happen is that neither company’s pipeline could be strong enough to offset patent cliff losses for the other. And those potential losses are large.
AstraZeneca’s U.S. exclusivity for Atacand, Losec/Prilosec, Seloken/Toprol-XL, and Seroquel IR already expired. Nexium faces generic competition next year, with Crestor going off-patent in 2015. These drugs totaled around $6.5 billion in U.S. sales during 2012.
Bristol-Myers lost patent protection for Plavix and Avapro last year. The company faces possible generic rivals for Baraclude this year. Sustiva goes off-patent in the U.S. by the end of 2015. Bristol-Myers also loses commercialization rights for Abilify around the same time. These drugs combined for nearly $9 billion in 2012 sales.
Speak now
In real weddings, the point usually comes where the minister says that if anyone has reason that the parties shouldn’t be married, they should “speak now or forever hold their peace.” So, just in case a marriage between these two companies is actually under consideration, allow me to speak up.
I don’t think a merger between AstraZeneca and Bristol-Myers would serve the best interests of either company’s shareholders. My preference would be for both companies to pursue smaller deals with companies that have great near-term growth catalysts. And I think this scenario is much more likely, by the way. I hope AstraZeneca and Bristol-Myers Squibb will be happily married — but just not to each other.
The article Should AstraZeneca and Bristol-Myers Squibb Get Married? originally appeared on Fool.com is written by Keith Speights.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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