Advances in cancer drugs fuel blockbuster deal

Bristol-Myers Squibb's $74 billion deal to acquire rival Celgene creates a cancer drug powerhouse amid industrywide optimism about the rapidly evolving science and explosive growth of the sector, where major scientific advances have led to groundbreaking new medicines.

Bristol-Myers Squibb's $74 billion deal to acquire rival Celgene creates a cancer drug powerhouse amid industrywide optimism about the rapidly evolving science and explosive growth of the sector, where major scientific advances have led to groundbreaking new medicines. The agreement could signal a return of deal-making to the pharmaceutical industry as a whole, particularly in the $123 billion market for cancer drugs, now one of the biggest pharmaceutical sectors. In December, GlaxoSmithKline returned to the cancer-drugs market by agreeing to buy Tesaro and its ovarian cancer drug for $4.16 billion. Being bigger helps pharmaceutical companies in the negotiations with insurance companies and PBMs that determine reimbursement and coverage. As valuations of biotech companies have declined, they are becoming more attractive targets to major firms with continued access to cash. During the past decade or so, millions of cancer patients have benefited from new treatments. At the same time, the medicines have been profitable for drug manufacturers, with operating margins that can run has high as 60%–70%, according to analysts. The combined company created by the Bristol-Myers acquisition of Celgene will provide nine treatments with more than $1 billion in sales.