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Mehta Analysis: BMS/Celgene Merger Shows Big Pharma Is Stuck In Wrong Groove

 
• By Viren Mehta

Bristol-Myers Squibb executives are justifying the acquisition of Celgene in terms that have been well-rehearsed through the history of big pharma mergers. But they are failing to consider radical changes to the environment in which pharma operates, argues Viren Mehta of Mehta Partners LLC.

Drain
Pharma mega-mergers: value creators or destroyers? • Source: Shutterstock

In Gujarati, we have a saying, ‘Kona Bap-ni Diwali?’, or KoBaDi for short. It translates as‘Whose father may end up paying for this folly, such wishful thinking?’

Enter the mother of all biopharma deals, Bristol-Myers Squibb Co.’s proposal to acquire Celgene Corp. for about $90bn, which will also see close to $1bn paid to financial and legal advisors. Why is this transaction being opposed by some of the investors who have broadly embraced most of the preceding value-destroying mega-mergers

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