AstraZeneca shares plunge £18bn as investors reject Bristol Myers Squibb merger plan
AstraZeneca suffered a devastating £18 billion blow to its market value as the City delivered a harsh verdict on reports the pharmaceutical giant is pursuing a mega-merger with US rival Bristol Myers Squibb.
The FTSE 100 company's shares tumbled 9 per cent to 11,500p, wiping out nearly a tenth of its value in a single session, as analysts questioned the strategic logic behind what could be announced as soon as today as one of the largest pharmaceutical deals in history.
Despite the market's thumbs-down, chief executive Pascal Soriot remains committed to the merger, which would create the world's fourth most valuable drugmaker with a combined market capitalisation of around £300 billion. The deal is expected to be structured primarily through stock rather than cash, with investment bank Morgan Stanley among the advisers.
Soriot has secured tentative backing from the Government by pledging to maintain the enlarged company's headquarters in Britain, addressing concerns that the merger could trigger a shift of the firm's main stock market listing to New York.
Strategic rationale questioned
The proposed tie-up has left many industry watchers puzzled. Michael Leuchten, analyst at broker Jefferies, said the strategic case for combining the two companies was
not yet clear, noting that many of Bristol Myers Squibb's drug assets
could be sourced elsewhere, particularly in China.
He added:
Given the strength of Astra's growth and innovation profile, we are a bit perplexed.
The merger plans come despite Soriot stating last week that AstraZeneca did not
need mergers and acquisitionsto deliver its ambitious $80 billion revenue target for 2030, up from $45.8 billion in 2023. That target, announced in May 2024, includes plans to launch 20 new medicines by the end of the decade.
Complementary but overlapping portfolios
Both companies have substantial oncology operations, which will attract intense regulatory scrutiny. AstraZeneca's cancer drug portfolio generated around $25 billion in 2025, representing close to half its overall revenue. Bristol Myers Squibb's cancer medicines accounted for more than 40 per cent of sales in the first half of 2026.
However, the companies' oncology pipelines are largely complementary, with AstraZeneca stronger in solid tumours while Bristol Myers Squibb focuses more on blood cancers and cell therapies.
The significant overlap in cancer treatments means the merger would face substantial regulatory hurdles on both sides of the Atlantic. Pharmaceutical mega-mergers face heightened antitrust scrutiny in 2026, with revised US merger guidelines establishing that deals resulting in over 30 per cent market share may violate competition law.
US expansion strategy
The deal would significantly deepen AstraZeneca's presence in the lucrative American market. The company's US sales accounted for 42 per cent of total revenue in the first half of 2026, while Bristol Myers Squibb sourced 69 per cent of its revenues from the US market in the last quarter.
AstraZeneca completed a direct listing on the New York Stock Exchange earlier in 2026, substantially deepening its American commercial presence while remaining listed in London. Soriot has previously described AstraZeneca as a
very American companyand has struck multiple multi-billion-dollar licensing deals in the US.
Leuchten highlighted the political dimension of the deal, noting:
Astra would effectively be a UK-based acquirer of one of America's large pharmas at a time when US policymakers are focused on domestic manufacturing and strategic industries. This could be a way to continue expanding its US footprint, but it would likely need to be navigated to reduce friction.
Bristol Myers faces patent cliff
For Bristol Myers Squibb, the merger offers a potential solution to looming patent expiration challenges. The company faces significant pressure as exclusivity periods wind down on its most important medicines, with blood thinner Eliquis and cancer drug Opdivo both potentially vulnerable to generic rivals by 2028.
Despite these challenges, Bristol Myers Squibb raised its 2026 revenue guidance to $49-50 billion in its second-quarter earnings report released in July, up from earlier guidance of $46-47.5 billion, suggesting the company is not in immediate financial distress.
Vindication for Soriot
If completed, the merger would vindicate Soriot's controversial decision to reject a £70 billion takeover offer from Pfizer in 2014. That bid, valued at approximately $117-118 billion, was the largest attempted pharmaceutical merger in history at the time and came when AstraZeneca was vulnerable to a buyout.
Since rejecting Pfizer's approach, Soriot has transformed the company's fortunes, driving its market value to £196 billion before today's sharp decline. The merger talks caught investors off guard given his recent assertion that the company could achieve its growth targets without major acquisitions.
AstraZeneca declined to comment on the merger reports. Bristol Myers Squibb did not respond to requests for comment.
