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If combined, AstraZeneca and Gilead Sciences would have a market capitalization of about $237 billion, exceeding Merck & Co and Pfizer worth $207 billion and $200 billion respectively.
British pharma giant AstraZeneca Plc (NYSE: AZN) has contacted its COVID-19 vaccine rival Gilead Sciences Inc (NASDAQ: GILD) to offer a merger. As Bloomberg News has reported, it happened in May, but terms for any transaction were not specified. If signed, the deal would be the biggest health-care merger in history.
Both AstraZeneca and Gilead Sciences declined to comment on the merger news. But those familiar with the matter said the US biotech giant showed no interest in merging with another big pharmaceutical company. Instead, Gilead is focusing on small acquisitions.
Jefferies analysts believe the deal will not take place. They said:
“We think Gilead believes its HIV business is very underappreciated. The company would prefer to build value over time and do its own tuck-in deals.”
Some experts have cast doubt on the motive behind AstraZeneca’s offer. The company has been at the forefront of efforts to develop a COVID-19 vaccine in collaboration with Oxford University. If successful, the vaccine could significantly advance its value.
AstraZeneca and Gilead Stocks’ Response to the News of Potential Merger
As of Friday, AstraZeneca’s value was $141 billion, while Gilead was worth $96 billion. If combined, the two companies would have a market capitalization of about $237 billion, exceeding Merck & Co Inc (NYSE: MRK) and Pfizer Inc (NYSE: PFE) worth $207 billion and $200 billion respectively.
On Friday, both AstraZeneca and Gilead stocks were slightly down at the close. AstraZeneca ended 0.04% down, at $53.85. Gilead shares closed at $76.75, or 1.02% down.
Following the potential merger news, Gilead Sciences stock rose and in the pre-market today, it is 3.35% up, $79.32 per share. As for AstraZeneca, its shares are 2.64% down at the moment of writing, $52.43.
COVID-19 Vaccine Progress
Both AstraZeneca and Gilead Sciences have made significant progress in COVID-19 vaccine development.
Gilead Sciences placed a bet on remdesivir — a drug originally developed to treat hepatitis C and then tested against the Ebola virus and Marburg virus. Being ineffective for all of these viral infections, remdesivir showed promise in treating coronavirus.
The drug received authorization for use under an Emergency Use Authorization (EUA) in severely ill patients in the United States, India, and South Korea. Besides, it has got approval from the Japanese government to be used in the fight with COVID-19.
Gilead promised to supply remdesivir to 127 countries, not including the U.S. To distribute the drug, the company signed non-exclusive voluntary licensing agreements with five generic pharmaceutical manufacturers in India and Pakistan.
By the end of 2020, Gilead Sciences is going to manufacture 1 million doses of remdesivir. In 2021, this number is expected to be several million. As for the revenue remdesivir sales could bring, SVB Leerink analysts estimated Gilead would generate annual peak revenue of $7.7 billion in 2022.
AstraZeneca has made great efforts to fight COVID-19 as well. Many bet on its vaccine candidate developed in collaboration with Oxford University. Backed by Boris Johnson‘s UK government, it received a $1.2 billion support from the U.S. Department of Health and Human Services within the U.S. program called “Operation Warp Speed”.
Warning that its vaccine has a 50% chance of success and may return “no result”, AstraZeneca still hopes for the better and already makes plans on the distribution. The company is going to deliver 1 billion doses of a COVID-19 vaccine to developing countries, 400 million doses can become available this year.
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