A 100-billion-yuan high-stakes gamble is coming.

Even in the global biomedical industry where mergers and acquisitions are a common occurrence, a merger of this scale has never taken place.

A company that was once nearly acquired by its peer now sits at the main seat of the biggest negotiation table in the global pharmaceutical industry 12 years later.

Recently, the Financial Times of the UK broke the news that AstraZeneca and Bristol Myers Squibb are in merger negotiations that have been ongoing for several months. This news immediately triggered drastic shocks in the global capital market and biomedical industry. Since both companies are well-known global pharmaceutical giants, if the deal is finally closed, the combined new entity will have annual sales exceeding the 100-billion-US-dollar threshold, surpassing Johnson & Johnson, Roche, Merck, Pfizer and all other pharmaceutical giants to rank first in the world.

At present, AstraZeneca has a market value of about 260 billion US dollars, making it the second largest listed company by market capitalization in the UK; Bristol Myers Squibb also has a market value of 130 billion US dollars, and the combined market value of the two companies is nearly 400 billion US dollars. If the merger is finally completed, it will be the largest M&A deal in the history of the biopharmaceutical industry, exerting a far-reaching impact on the industry landscape. Numerous "blockbuster drugs" in the fields of oncology, cardiovascular, nephrology, metabolism, rare diseases and immunology, including Tagrisso, Imfinzi, Enhertu, Farxiga, Ultomiris, as well as Eliquis, Opdivo, Yervoy and Cobenfy, will be brought under the umbrella of one company.

However, the market does not seem to be optimistic about this deal. On August 3, the first trading day after the news was broken, AstraZeneca's share price plummeted by 7.9%, while Bristol Myers Squibb's share price rose slightly by 0.24%.

The Birth of a $100 Billion Drug Giant That Will Reshape the Industry Ranking

Even in the global biomedical industry where mergers and acquisitions are a common occurrence, a merger of this scale has never taken place.

Over the past decade or more, pharmaceutical giants have preferred to carry out "bolt-on" acquisitions worth billions to tens of billions of US dollars, and transactions worth tens of billions of US dollars are already considered rare mega-deals. In 2019, Bristol Myers Squibb acquired Celgene for 74 billion US dollars, which was one of the largest deals in the industry at that time; AstraZeneca's last major M&A deal was the $39 billion acquisition of Alexion in 2020, making rare diseases its fourth business pillar. But both of these deals are dwarfed by the proposed merger now.

Given the current scale of the two companies, under normal circumstances, neither can be acquired. AstraZeneca and Bristol Myers Squibb are both companies with abundant high-quality drugs. The former has products including Tagrisso, Imfinzi, Dapagliflozin, Osimertinib and Enhertu, while the latter owns Opdivo, Eliquis, Yervoy, Breyanzi, Camzyos and Cobenfy. When the two companies combine, there are corresponding products or pipelines covering almost all segments in oncology, cardiovascular, hematological oncology, cell therapy and neuroscience.

Financial reports show that AstraZeneca's revenue in 2025 was 58.739 billion US dollars, and Bristol Myers Squibb's revenue was 48.194 billion US dollars. That means the combined revenue of the two companies will reach 106.933 billion US dollars, exceeding Johnson & Johnson's 94.2 billion US dollars, making it the first pharmaceutical enterprise in history with annual revenue crossing the 100-billion-US-dollar threshold.

However, completing a merger deal of this scale may be extremely difficult. According to reports, the negotiations are still in the early stage, and neither AstraZeneca nor Bristol Myers Squibb has disclosed any details about the deal. According to estimates from the investment bank BMO Capital Markets, Bristol Myers Squibb's independent M&A transaction capacity is about 32 billion US dollars, while AstraZeneca's is about 37 billion US dollars, and neither can directly afford to acquire the other. Therefore, if this deal is to move forward, an extremely complex equity exchange structure must be designed, accompanied by large-scale debt refinancing, not to mention regulatory hurdles such as anti-monopoly reviews.

This is also a major reason why the stock market's reaction to this century-level mega-merger is not enthusiastic. Many analysts believe that this deal is very likely to "never happen". Even if the merger is finally completed, the integration of the two companies will face huge uncertainties, especially for AstraZeneca, which has maintained a very strong development momentum in recent years.

From Being Put Up for Sale to Aiming for the Global No.1

Whether measured by market value or revenue, AstraZeneca is undoubtedly the protagonist of this deal. This British pharmaceutical giant has more than doubled its revenue and market value since 2020, and is regarded as the most successful "model of organic growth" among all global pharmaceutical enterprises. This merger with Bristol Myers Squibb is an important step for AstraZeneca to accelerate its commercial penetration and production capacity deployment in the key US market, and if successful, it even has the chance to become the new generation of global "pharmaceutical leader".

Who could have imagined that just ten years ago, AstraZeneca was once on the verge of a survival crisis.

AstraZeneca is a century-old pharmaceutical company, whose history dates back to 1913, when it was a Swedish company. In 1999, AstraZeneca was acquired by a British company and became a UK-based enterprise. At that time, it was already one of the top three global pharmaceutical giants. Many globally best-selling drugs such as metoprolol, pulmicort and omeprazole were developed by AstraZeneca.

However, from 2011 to 2018, the performance of this century-old pharmaceutical company showed a dangerous downward trend. Its annual sales hit a peak of 33.591 billion US dollars in 2011, but dropped to only 22.090 billion US dollars in 2018, shrinking by one third.

The reason for the sudden drop in AstraZeneca's sales is the so-called "patent cliff" that is widely feared in the biomedical industry. The revenue of pharmaceutical companies is highly dependent on the sales of patented drugs, and patents expire after 20 years. Once the patent expires, the market will be quickly occupied by a flood of generic drugs, and the revenue of the original drug will plummet accordingly.

After 2010, with the patents of core drugs such as Crestor and Seroquel expiring one after another, AstraZeneca thus hit the patent cliff head-on. Such stories are not uncommon in the biomedical industry. The common choices are to cut R&D spending to maintain profits, or simply sell the company. In fact, Pfizer once took advantage of the opportunity to launch a hostile takeover of AstraZeneca in 2014, offering a valuation of 117 billion US dollars at that time.

However, AstraZeneca's management led by CEO Pascal Soriot resisted Pfizer's acquisition, and decided to re-invest in R&D, reshape the new drug development pipeline, and lead the company out of the patent cliff.

After reviewing its failed projects from 2005 to 2010, AstraZeneca found that many drugs did not fail at the final stage, but chose the wrong targets, patients or doses from the very beginning. On this basis, the company established the well-known "5R" framework: the right target, the right tissue, the right safety, the right patient and the right commercial potential, and encouraged the R&D team to terminate unpromising projects as early as possible.

The most critical point of this change is to move "failure" from the end of the R&D process to the front end. If a drug fails after entering Phase III clinical trials, the years of time and hundreds of millions of US dollars invested in the early stage are often written off; if the project is terminated at the pre-clinical or early clinical stage, the cost will be much lower. AstraZeneca no longer rewards teams based on the number of projects that enter clinical trials, but asks whether the target can withstand biological verification, whether the drug actually reaches the target tissue, and which patients are most likely to benefit. By reducing the number of seemingly busy projects, the hit rate of the later-stage pipeline is greatly improved.

Another reform of AstraZeneca is to concentrate resources on a few therapeutic areas where it can truly build competitive advantages. AstraZeneca was famous for its lipid-lowering, digestive and psychiatric drugs in its early years. After the transformation, it put oncology in the first place, and used cardiovascular, renal and metabolic, respiratory immunology and rare diseases as the foundation to support its business. This trade-off allowed it to avoid the trap of "being large and all-inclusive": each core business segment has mature products to generate revenue, as well as early-stage, mid-stage and late-stage projects in succession, so that R&D, medical affairs and sales teams can be repeatedly reused for the same group of doctors and patients.

With the successive launch of new drugs such as Tagrisso and Farxiga, AstraZeneca's revenue returned to the growth track. When rejecting Pfizer's acquisition, AstraZeneca's management publicly promised that the company's annual revenue would exceed 45 billion US dollars by 2023. This goal was achieved as scheduled, and the actual revenue in 2023 reached 45.811 billion US dollars.

This turnaround was not achieved by relying on a single "blockbuster drug". By 2025, AstraZeneca already had 16 products with annual sales exceeding 1 billion US dollars. The four business lines of oncology, cardiovascular, renal and metabolic, respiratory immunology and rare diseases take over from each other in turn: when the growth rate of one product slows down, another indication or therapeutic area can make up for it.

Today, AstraZeneca is considered to have one of the highest-quality product pipelines in the industry. This is also the reason why many people are confused about why AstraZeneca wants to merge with Bristol Myers Squibb. For example, an analysis from Jefferies pointed out: "AstraZeneca has always been one of the strongest organic growth cases in the industry, so investors have reasons to question why it does not continue to implement its existing strategy, but expose itself to the uncertainty of a large-scale M&A deal."

Another Patent Cliff

The situation that Bristol Myers Squibb is facing at this moment is just like that of AstraZeneca more than a decade ago.

Bristol Myers Squibb is currently at its performance peak, with revenue of 48.194 billion US dollars in 2025, which is not much lower than that of AstraZeneca. However, the market value of Bristol Myers Squibb is only half of that of AstraZeneca.

The reason behind this is also the patent cliff.

In 2025, more than half of Bristol Myers Squibb's revenue comes from two "blockbuster drugs". The first one is the anticoagulant Eliquis (apixaban), which generated 14.4 billion US dollars in sales in 2025; the other is the PD-1 immunotherapy drug Opdivo, which generated 10 billion US dollars in sales in 2025. The patents of both drugs in the United States will expire around 2028.

Therefore, although Bristol Myers Squibb's revenue seems very high now, its future revenue decline is already inevitable. Generally speaking, once generic drugs enter the market, the market share of the original drug will drop to less than 50% in just a few years. In particular, Eliquis, as a small-molecule drug with low difficulty for generic production, will decline even faster.

Of course, the patent cliff is not unsolvable. Large pharmaceutical companies will use pipeline succession to control the risk of the patent cliff. Bristol Myers Squibb has many new drugs that are said to have great potential already entering Phase III clinical trials. For example, Milvexian, the next-generation Factor XIa inhibitor developed in cooperation with Johnson & Johnson, is highly expected to take over the baton from Eliquis.

Therefore, AstraZeneca's choice to merge with Bristol Myers Squibb at this time can be regarded as bottom-fishing, or as taking over a potential burden. In any case, it is a high-risk big bet.

From AstraZeneca's perspective, the reason for launching this deal is not difficult to understand. As a company in a rising period, it is normal for AstraZeneca's appetite for acquisitions to grow larger and larger.

In fact, AstraZeneca's acquisition moves have also attracted attention in China's biotech industry. At the end of 2023, AstraZeneca acquired Gracell Biotechnologies for up to 1.2 billion US dollars, marking the first full acquisition of a Chinese biotech enterprise by a multinational pharmaceutical company. According to 2025 statistics from biopharma, AstraZeneca is the most active acquirer in China, with a total committed transaction value of 19 billion US dollars.

AstraZeneca's management has set a new performance target of achieving sales exceeding 80 billion US dollars by 2030, and launching at least 20 new molecular entity drugs. To achieve these ambitious goals, it is obvious that M&A tools will be indispensable.

AstraZeneca's pursuit of scale is not entirely a mania for expansion, but also involves a sense of anxiety.

In the biotech industry, a widely repeated saying is that companies should become platform-based enterprises, instead of relying on only one or two product lines. From the examples of AstraZeneca and Bristol Myers Squibb, it is not hard to see that even enterprises with annual revenue of tens of billions of US dollars and market value of over 100 billion US dollars still cannot get rid of the anxiety about their product lines.

In fact, AstraZeneca is not completely free of worries at the moment. The patents of its flagship products Farxiga and Tagrisso will expire one after another around 2030. At that time, it remains to be seen whether the new generation of ADC, oral GLP-1 and cell therapy product lines can achieve seamless succession. Taking advantage of the current high-growth premium of its own stock to acquire Bristol Myers Squibb's US commercial network and rich product pipelines in the fields of immuno-oncology and neuroscience at a relatively low cost may not be a bad choice.

This article is from the WeChat official account "Dong Shi Tiao Capital" (ID: DsstCapital), author: Tao Huidong, editor: Wang Qingwu, published with authorization from 36Kr.