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Gilead Approached By AstraZeneca For A Possible Merger

Gilead Approached By AstraZeneca For A Possible Merger
According to reports quoting familiar with the matter, drug maker Gilead Sciences Inc has been preliminarily approached by AstraZeneca Plc seeking a merger. If the deal goes through, it would be the largest deal on record for the health-care industry.
The reports stated that Gilead was informally approached last month by the United Kingdom-based firm in order to test the aptitude of the rival firm for a merger. The reports quoting sources with knowledge of the matter said that terms for any transaction were not specified by AstraZeneca. Sources reportedly said that no decision has been taken by Gilead about how to proceed even though the company had discussed the idea with advisers. The reports cautioned that the companies are not currently in formal negotiations for a merger.
With a total market valuation of $140 billion, AstraZeneca is the biggest drug maker of the UK by market capitalization. The company is known for having developed treatments for multiple diseases ranging from cancer to cardiovascular diseases. The valuation of Gilead was at $96 billion as of last week and it has now developed a drug hat has been approved by authorities in the United States for use among novel coronavirus patients.
According to the reports however, sources have said that there is no intention or interest within Gilead to sell or to merge with another big pharmaceutical company but would rather want to keep its strategy only focused on partnerships and smaller acquisitions.
No official comments on the issue was however available from Gilead. On the other hand, a spokesman for AstraZeneca said that the company doesn’t comment on “rumors or speculation.”
At a time when drug makers across the world are racing to find effective treatments for Covid-19 and this latest move by AstraZeneca is a reflection on a possible shift in the pharmaceutical industry landscape. In case the two companies manage to merge, it would be larger than the Bristol-Myers Squibb Co.’s $74 billion takeover of Celgene Corp. last year and would become the largest ever health-care acquisition. And such a deal would also be among the top 10 M&A deals of all times.
Over the last one year, there has been a 41 per cent rise in shares of AstraZeneca while those of Gilead gained about 19 per cent over the same period.
With the drug for Covid-19, remdesivir, working its way through clinical trials in recent months, there has been an increase in investor interest in Gilead. The stock price is still lower than the high that it had reached in 2015.  Reinvigorating its drug-development pipeline is now the focus of the Foster City, California-based company because of a decline in sales in its hepatitis C franchise.
The US Food and Drug Administration has granted an emergency use authorization for Gilead’s covid-19 drug Remdesivir as some early studies with the treatment has shown that it can shorten hospital stays for people infected with the novel coronavirus.

Christopher J. Mitchell

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