GSK announced plans today to spend £1.6 billion on buying Canadian drug maker Bellus Health in a move that will help revitalise the City’s reputation for dealmaking while bringing a potential blockbuster cough treatment to the FTSE 100 company.
The $2 billion shot in the arm for the capital comes after a recent quiet spell for mergers and acquisitions added to worries about its status as a major international M&A venue.
“The fact this bid originated from the UK offers some genuine contrast to recent narratives about the death of the London market,” Joshua Mahony, chief market analyst at Scope Markets said.
“This trend of buyouts in the pharmaceutical sector is only likely to grow over time, with many firms sitting on huge cash piles and seeking to expand revenues ahead of expiration of current drug patents”.
Richard Hunter, head of markets at Interactive Investor, called the deal is “a reminder that the UK stock market still has legs,” adding: “it is further evidence of the move away from the traditional research and development departments of the pharma majors to a more acquisitive and specialised strategy.”
GSK’s move -- priced at $14.75-per share -- is the largest since the Brentford-based company demerged its consumer health business from its drug making wing last year. It is smaller than GSK’s last such swoop, the $5 billion it spent on Tesaro in 2019.
Today’s bid will mean the acquisition of Camlipixant, a drug for chronic coughs which the company says afflict 28 million people worldwide , with 10 million of them having symptoms for over a year. The treatment is expected to reach the market in 2026.
Luke Miels, GSK’s chief commercial officer, said: “this proposed acquisition complements our portfolio of specialty medicines and builds on our expertise in respiration.”
Bellus CEO Roberto Bellini called GSK “the ideal company to rapidly bring Camlipixant to the millions suffering from refractory chronic cough around the world.”
The deal is subject to regulatory approval. GSK’s stock slipped 5p to 1508p.
