Bristol-Myers Squibb's $74 Billion Acquisition of Celgene Sends Shockwaves Through Biotech R&D Landscape

On January 3, 2019, U.S. pharmaceutical giant Bristol-Myers Squibb (BMS) announced its acquisition of Celgene for $74 billion. This transaction became the largest merger and acquisition deal in the history of the pharmaceutical industry, sending shockwaves through the biotechnology sector. The merged entity would emerge as a “pharma behemoth,” offering nine products to the market with projected total annual revenues of $15 billion. Public filings indicate that each of these products generated over $1 billion in sales in 2018 for the respective companies.

VCBeat (WeChat ID: vcbeat) has learned that Celgene, one of the most active investors and acquirers in the biotechnology sector, has consistently delivered standout performance in pharmaceutical-related financing and investment activities. Since 2013, Celgene has completed eight acquisitions, including those of Juno Therapeutics (a CAR-T cancer therapy company), Impact Biomedicines (a hematologic malignancy treatment company), and Receptos (a multiple sclerosis therapeutics developer), with total acquisition costs exceeding $2.7 billion.

In the biopharmaceutical sector, apart from Celgene, only Allergan and Bristol-Myers Squibb have completed acquisitions worth billions of dollars in the past six years. Celgene’s active participation in M&A transactions has increased the acquisition rate among biopharmaceutical companies and driven up acquisition prices.

Celgene is also one of the most active companies in investment transactions within the biotechnology sector. Since 2013, the company has made more than 60 investments. Investee companies include CRISPR Therapeutics, Atara Biotherapeutics, Flexus Biosciences, Zymeworks, and Mirna Therapeutics, among others. In 2017, Celgene invested in the Chinese pharmaceutical company Antengene, initiating in-depth collaboration between the two parties. Through strategic investments and mergers and acquisitions, Celgene has achieved notable success in the healthcare sector. For instance, as an early investor in COTA, a provider of cancer outcomes data, Celgene has generated substantial annual returns from this investment.

The acquisition of Celgene will result in a lack of strong competitors in the investment and financing market, which is not favorable for small biotechnology companies. This is because they will have limited bargaining power when negotiating financing and acquisitions with large corporations in the future. Furthermore, the strategic alliance between Bristol-Myers Squibb and Celgene will reduce drug R&D competition among top-tier companies. If no other biotech firms enter the competitive landscape, this will trigger significant ripple effects in the field of biomedical R&D. Specifically, the monopolistic advantage of large corporations in new drug development will erode the survival space of small and medium-sized pharmaceutical enterprises, while also compelling large companies to abandon the R&D of certain new drugs due to a lack of competition.

Bristol Myers Squibb is a global biopharmaceutical company headquartered in New York, with the mission to “discover, develop and deliver innovative medicines that help patients prevail over serious diseases.” Its predecessor was Clinton Pharmaceutical Company, founded in 1887. In 1898, the company was renamed Bristol-Myers Company. In 1900, it was incorporated as a joint-stock enterprise and shifted its business focus to pharmaceutical wholesale and retail, thereby achieving rapid growth.

(Compiled by Hu Xuan)