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AstraZeneca is eyeing massive Gilead merger

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AstraZeneca scientist at work in a laboratory (AstraZeneca/PA)

AstraZeneca scientist at work in a laboratory (AstraZeneca/PA)

AstraZeneca scientist at work in a laboratory (AstraZeneca/PA)

UK-based AstraZeneca has approached rival drugmaker Gilead Sciences about a potential merger in what would be the biggest healthcare deal on record.

AstraZeneca contacted Gilead last month about a possible tie-up, people familiar with the matter said, asking not to be identified because the details are private. AstraZeneca didn't specify terms for any transaction, they said, while Gilead has discussed the idea with advisers, no decisions have been made on how to proceed and the companies aren't in formal talks.

AstraZeneca, with a market capitalisation of £110.5bn (€124bn), is the UK's biggest drugmaker by market capitalisation and has developed treatments for conditions from cancer to cardiovascular disease. Gilead, worth $96bn (€85bn) at Friday's close, is the creator of a drug that's received US approval for use with coronavirus patients.

Gilead is not currently interested in selling to or merging with another big pharmaceutical company, preferring instead to focus its deal strategy on partnerships and smaller acquisitions, the people said.

A representative for Gilead couldn't be reached for comment outside of regular business hours. A spokesman for AstraZeneca said the company doesn't comment on "rumours or speculation".

Gilead's share price has climbed 18pc this year as its antiviral drug for Covid-19, Remdesivir, worked its way through clinical trials.

The stock is still more than a third lower than its 2015 highs. The California-based company has seen a decline in sales in its hepatitis C franchise and is trying to reinvigorate its drug-development pipeline.

Remdesivir, which has an emergency use authorisation from the US Food and Drug Administration, has been shown in some early studies to shorten hospital stays for people with Covid-19. SVB Leerink recently forecast sales of the drug may reach $7.7bn in 2022.

Gilead has been dispensing early rounds of the drug for free, leading some investors to question how the company plans to profit from it. (Bloomberg)

Bloomberg