Merck's $41.1 billion bid for Schering-Plough continues a wave of merger activity in the drug sector, providing one of the few corners of activity in an otherwise dismal M&A environment.
Merck gets a boost in the cardiovascular, respiratory and oncology markets and some promising new drugs including Schering-Plough's blood clot prevention drug TRA. The deal also firmly places Merck as a global player with a hefty position in emerging markets, an area seen as key for future healthcare profits. Schering-Plough generates about 70 percent of its revenue outside of the United States, including more than $2 billion in annual revenue from emerging markets, the companies said.
The price reportedly came down as Schering shares (and those of most drugmakers) slumped this year, Schering CEO Fred Hassan said in a conference call.
The deal for Schering, also reportedly considered by rival Johnson & Johnson, is the latest massive pharma deal this year. In January, Pfizer unveiled its $62 billion bid for rival Wyeth.
More deals are likely on the way. Most recently, Roche raised its bid for biotech giant Genentech to $93 a share from $86.50. The sector is fretting over the threat of thinner profits thanks to expected healthcare reforms under the Obama Administration while at the same time enduring a wave of patent expirations on blockbuster drugs that drove outsized revenue over the past several years.
The press release for the deal is here.