American Home Products' $8.5 billion bid for American Cyanamid is another example of how pharmaceutical companies are trying to shape themselves for an uncertain future and become more appealing to managed care organizations. John Stafford, chairman of AHP, said that the emergence of managed care programs and large drug-buying groups has transformed the drug industry. Companies like his own need to be even bigger to have a large presence and a market share, he noted.
If the deal goes ahead, the resulting company would have combined drug revenues of $5.58 billion, which would place it in fourth position in world drug sales ranking. Total combined revenues would be around $12.5 billion, which is greater than the $10.5 billion in sales achieved by Merck & Co in 1993.
Neither company on its own is of a size that will enable it to survive in a changing drug industry. Most industry observers believe that should this deal not go through, AHP will make a move on another target. However, despite the unconfirmed interest of SmithKline Beecham in parts of American Cyanamid (Marketletter August 8), the AHP offer of $95 per share may not be enough to keep any other potential suitors at bay.
This article is accessible to registered users, to continue reading please register for free. A free trial will give you access to exclusive features, interviews, round-ups and commentary from the sharpest minds in the pharmaceutical and biotechnology space for a week. If you are already a registered user please login. If your trial has come to an end, you can subscribe here.
Login to your accountTry before you buy
7 day trial access
Become a subscriber
Or £77 per month
The Pharma Letter is an extremely useful and valuable Life Sciences service that brings together a daily update on performance people and products. It’s part of the key information for keeping me informed
Chairman, Sanofi Aventis UK
Copyright © The Pharma Letter 2024 | Headless Content Management with Blaze