LONDON — AstraZeneca has held discussions with Bristol Myers Squibb regarding a potential merger that would combine two of the world's largest pharmaceutical companies. The proposed merger would create a pharmaceutical group with a combined market value of nearly $400 billion.

A completed deal would create the world’s fourth largest drugmaker by market value, joining a small tier of global industry leaders. AstraZeneca is headquartered in Cambridge, England, while Bristol Myers Squibb is headquartered in Princeton, New Jersey. There is no certainty that a deal will be concluded, and both companies have remained largely silent on the reports. AstraZeneca declined to comment on the merger talks, and Bristol Myers Squibb did not immediately respond to requests for comment.

Market reaction to the news was mixed, with investors weighing the strategic fit against regulatory risks. AstraZeneca shares fell 8.9% to close at £115 in London following the report of the merger talks. The stock had dropped as much as 7% in early trading following the report.

In New York, Bristol Myers Squibb shares rose 3.5% in pre-market trading. The shares rose 1.7% after Wall Street opened before reversing those gains by midday in New York.

The potential transaction would dwarf AstraZeneca's $39 billion acquisition of Alexion in 2021, which is currently the biggest deal in its history. AstraZeneca has a market value of nearly £196 billion, while Bristol Myers Squibb has a market value of $133 billion. The British-Swedish company reported $59 billion in sales last year and expects to achieve $80 billion in annual sales by 2030. Cancer treatments accounted for about $25 billion in AstraZeneca's 2025 sales, and cardiovascular, renal and metabolism treatments accounted for about $12 billion.

Bristol Myers Squibb reported quarterly revenues of $12.97 billion, up 5% from a year earlier excluding currency movements. However, the American pharmaceutical company faces pressure from upcoming patent expirations. Bristol Myers Squibb faces patent expirations for Revlimid and Pomalyst in 2026.

The company also faces patent expiration for Eliquis in 2028. Eliquis and Opdivo make up about half of Bristol Myers Squibb's sales. Bristol Myers Squibb's pipeline includes experimental drugs like milvexian, a blood thinner, and Camzyos, a heart drug, which could be critical in addressing patent expirations and competing with AstraZeneca's oncology portfolio.

Regulatory scrutiny presents a major obstacle to any combination, particularly given the overlap in key therapeutic areas. AstraZeneca's cancer immunotherapy drugs Imfinzi and Bristol Myers Squibb's Opdivo directly compete in non-small cell lung cancer, a key area of antitrust concern for regulators. The Federal Trade Commission (FTC) has historically required divestitures in pharmaceutical mergers, such as the $13.4 billion sale of Otezla during Bristol Myers Squibb's Celgene acquisition. In 2019, Bristol Myers Squibb acquired Celgene for $80 billion, which required the sale of psoriasis treatment Otezla for $13.4 billion to address antitrust concerns.

Analysts expressed skepticism about the strategic logic and the likelihood of regulatory approval. Michael Leuchten, an analyst at Jefferies, stated: "‘Why’ is perhaps not yet clear to us: we suspect that most people will focus on the potential to establish an even bigger oncology powerhouse, with the resultant portfolio likely the broadest in the industry. However, beyond the regulatory hurdles we would argue that pipeline assets could be sourced elsewhere, as AstraZeneca has been doing, particularly in China." John Murphy, a senior pharma analyst at Bloomberg Intelligence, stated: "Their growth outlooks are very different – double-digit earnings gains are forecast at Astra through 2030, with Bristol set for continued declines, due to multiple patent expiries – and, while both are focused on developing promising pipelines, history suggests such mega-mergers hamper pipeline progress. Major cost savings via eradication of overlapping infrastructure is one obvious benefit but would suggest reduced confidence at Astra in its pipeline and growth outlook. A link-up in certain disease categories may be a possible area of future collaboration." Chris Beauchamp, a chief market analyst at IG, stated: "Though a rare example of a big UK firm buying a smaller US firm is something to warm the cockles of the British heart, it risks the departure of yet another national champion, and in any case the pair’s large cancer divisions are a major hurdle to a successful deal. BMS has struggled since 2023, and some Astra shareholders will wonder at the need to do expensive M&A when their shares are doing so well."

AstraZeneca has been expanding its presence in the United States to support its growth targets. AstraZeneca is investing $50 billion in research and manufacturing in the U.S. by 2030. AstraZeneca completed a direct listing of its shares on the New York Stock Exchange in June.

This move was part of a $50 billion U.S. investment strategy, aiming to capitalize on higher valuations and mitigate risks from patent cliffs. Recent product performance has been strong, with AstraZeneca's Calquence surpassing $1 billion in quarterly sales for the first time. Revenue from AstraZeneca's Imfinzi and Imjudo surged by 25%. Pascal Soriot is the chief executive of AstraZeneca. He has previously stated that the company must move at "Chinese speed" to ensure it does not fall behind competitors.

The two companies have deep historical roots in their respective home markets. Bristol Myers Squibb was founded in 1858. AstraZeneca was formed in 1999 from the merger of the Swedish company Astra AB and the U.K. company Zeneca Group.

Zeneca Group had been spun off from Imperial Chemical Industries five years prior to the 1999 merger. AstraZeneca fended off a hostile bid from Pfizer in 2014 that valued the company at almost £70 billion. Today, AstraZeneca currently has around 10,000 U.K. staff at five sites across the U.K. The company has 4,000 staff at its main facilities in Cambridge and Macclesfield, and 2,000 staff in London and Luton. Bristol Myers Squibb employs about 800 people in the U.K. Bristol Myers Squibb's U.K. research team of 250 people is based at Moreton on the Wirral peninsula near Liverpool. Bristol Myers Squibb's commercial head office for the U.K. and Ireland is in Uxbridge, west London.

Why It Matters

A completed deal would create the world's fourth largest drugmaker by market value, joining a small tier of global industry leaders with a combined valuation near $400 billion. The transaction addresses Bristol Myers Squibb's exposure to patent expirations on key drugs that currently drive half its sales. However, analysts note that merging distinct growth outlooks and overlapping cancer portfolios could hamper pipeline progress and face significant regulatory hurdles.