AstraZeneca plc (NYSE:AZN) is already planning on going bigger in the future, and it believes that one of the best ways to achieve that is through a merger with rival and pharmaceutical industry giant, Gilead Sciences, Inc. (NASDAQ:GILD).
Sources familiar with the matter revealed that AstraZeneca has expressed interest and even approached Gilead with the merger proposal. The news comes at a time when the two companies are among the group of biopharma on the race to find a working cure or vaccine for COVID-19. A merger between the two companies would be one of the biggest deals in the pharmaceutical industry.
The anonymous sources claim that the two companies are not yet involved in formal negotiations over the potential plans. Also, neither of the two companies has released any statement regarding the matter. However, a merger between the two companies is not farfetched. If such were to happen, it would greatly benefit both companies.
The two companies would combine their resources and technical know-how to develop treatments for a variety of medical conditions. It would also allow the resulting firm to have a wider market reach. However, if the talks about a potential merger are true, then they are at a stage where things are not definitive. This means that there is still a high chance that the proposal will be dropped. Formal announcements confirming the talks will likely only be made once they decide conclusively to follow through with the merger plans.
Some investors have reportedly expressed concerns over the report about the merger, more particularly about the strategic focus. There was a slight 2 percent drop in AstraZeneca’s share price in London’s opening, highlighting negative investor reaction. The lack of confidence in a potential merger is perhaps due to unfavorable timing, especially with the coronavirus wreaking havoc across the world.
The pharmaceutical industry is currently heavily focused on coming up with a cure and vaccine for the coronavirus. Perhaps merger talks will become more appealing once the problem at hand is solved, and that may explain why the two companies have chosen to remain silent regarding the merger plans.