Schering Plough merger with Bristol Myers Squibb ‘being considered’

A merger between Schering-Plough and Bristol-Myers Squibb (BMS) is under consideration, according to reports from a US newspaper.

Industry insiders told the Star-Ledger, a New Jersey newspaper, that Schering-Plough is thinking about approaching BMS to combine the two companies, creating one of the largest pharmaceutical companies in the world.

The motivation behind such a deal would lie in Schering-Plough’s ambition to reinvigorate its product pipeline, while BMS could benefit from the revenue earned from Schering-Plough’s Vytorin, the ezetimibe and simvastatin hypertension and cholesterol control drug.

David Moskowitz, an analyst at Friedman Billings Ramsey, told the newspaper: “Schering-Plough is stuck; it has no way out. Bristol- Myers getting Vytorin would be huge.”

However, some analysts have cast doubt on the possibility of a merger between the two companies. The ongoing legal uncertainty over generic competition for the BMS bestseller, Plavix, is cited by some as a major stumbling, while others believe Schering-Plough may be testing the market reaction to a merger.

Reuters quotes Barbara Ryan, an analyst with Deutsche Bank Securities, as writing in a report: “In our assessment, Schering-Plough could be launching a trial balloon, to test the response of their shareholders to such a merger.”

Other companies linked with a takeover attempt for BMS include GlaxoSmithKline, AstraZeneca, Pfizer, Merck Sharp & Dohme and Sanofi-Aventis, with which it manufactures and promotes Plavix.