The fortunes and flops of pharma M&A

Many of this year’s biopharma M&A deals look promising, including blockbuster match-ups like Pfizer’s $43 billion deal to acquire Seagen to bolster its cancer pipeline, and Merck & Co.’s $10.8 billion acquisition of Prometheus, which could buoy revenue ahead of expected patent losses in years to come.

But trying to predict whether an acquisition will lead to a healthy pairing or fall short is difficult. Over the years, the world of pharma and biotech M&A has resulted in many hits and misses — and only with the benefit of hindsight does success or failure become clear.

“[T]here are always a lot of unknowns and scenarios that can only play out over time,” said Daniel Chancellor, director of thought leadership at Citeline. “Most deals are for companies with assets that are still being developed, and so this carries clinical and regulatory risk.”

Due to the nature of the industry, the complexity of a deal sometimes hides how synergistic the two parties can be. For instance, Merck’s 2009 merger with Schering-Plough eventually yielded the blockbuster Keytruda, which Chancellor called “a jewel in the early pipeline.”

“Some of the most successful M&A [deals] created the majority of their value through serendipity rather than judgment,” Chancellor said.

Here are some of those M&A hits and misses in the world of pharma and biotech.

Miss: Bayer/Monsanto, 2018

Why it was trouble: “Today is a great day,” Werner Baumann, then CEO and chairman of the Bayer board of management, said in a company announcement of the German healthcare company’s acquisition of agriculture juggernaut Monsanto in June 2018. Just over a year later, though, The Wall Street Journal called the $63 billion acquisition “one of the worst corporate deals in recent memory.” Now, more than five years later, Bayer is facing calls for a breakup of the company.

Despite Bayer’s initial optimism, Monsanto had been plagued by problems for years, and those woes have haunted Bayer since the deal closed. Ditching the Monsanto name didn’t help. Less than two weeks ago, a jury ordered Bayer to pay $165 million to employees of a Washington State school over claims that Monsanto chemicals leaked from light fixtures and made them sick. That, combined with the news that Bayer is stopping a phase 3 study of the blood thinner asundexian due to a lack of efficacy, sent shares tumbling, shedding $8.3 billion in market value.

That’s just the latest in Bayer’s acquired agrochemical legal woes, which have included accusations of knowingly polluting water with mercury and polychlorinated biphenyl compounds, as well as the well-known allegations of its weedkiller, Roundup, causing cancer, and claims from farmers that drifting Monsanto chemicals decimated their crops. As a result, Bayer has found itself on the hook for billions of dollars from tens of thousands of lawsuits, including more than $10 billion in settlements paid in 2020.  

Hit: Bristol Myers Squibb/Celgene, 2019

Why it worked: The $74 billion megadeal combined two biopharma “powerhouses” in 2019 and, despite a few setbacks, led to nine new product launches between 2020 and 2022, Catherine Owen, Bristol Myers Squibb’ then-senior vice president of major markets, told PharmaVoice last year. Among those new product launches were two CAR-T cell therapies: Breyanzi for B cell lymphoma, and Abecma, which is the first CAR-T approved for multiple myeloma.

“What analysts and shareholders are looking for is: Did the deal deliver what it promised?” Owen said when reflecting on the Celgene merger. “We promised a focus on transformative innovation and on launching medicines in areas of high unmet need. And I think we’ve delivered on that.”

That’s not to say there haven’t been setbacks around BMS’ new products. The company recently adjusted its $10 billion revenue target from its new product portfolio by 2025, pushing the timeline a year later. BMS also saw dropping revenue in the third quarter this year, primarily from lower sales of the Celgene drug Revlimid thanks to generic erosion and the number of patients receiving the drug for free from the Bristol Myers Squibb Patient Assistance Foundation.

Still, the company said worldwide revenues generated from the new product portfolio increased to $928 million compared to $553 million the year before, for growth of 68%.