Merck/Prometheus: Big Pharma must swallow bigger premiums
At Merck, 2028 is circled on the calendar. The New Jersey pharmaceutical titan’s share price has doubled in the past five years, well ahead of the wider S&P 500 index. The catalyst is cancer treatment Keytruda, which generated one-third of Merck’s $60bn revenue last year. But Keytruda is expected to lose its patent protection in five years’ time.
The future is now. On Sunday, Merck announced that it would acquire Prometheus Biosciences for $10.8bn. It is paying Prometheus shareholders a 72 per cent premium over the three-month average share price. Yet the company’s monoclonal antibody treatment for inflammatory bowel disease has yet to be fully approved. In a quieter deal environment, this deal underscores that Big Pharma has the means to make big bets.
This story originally appeared on: Financial Times - Author:Faqs of Insurances
