Bayer and Merck have also agreed to work together to develop new compounds to treat various cardiovascular diseases. Merck will pay Bayer $1 billion upfront, and further payments of $1.1 billion related to that agreement.
Corporate activity in the sector has come alive this year. The value of pharma deals announced this year is running at its highest level since 2009, and at a record level across the broader healthcare sector.
The buying spree in the pharmaceutical world is being driven by low interest rates that make it cheaper to borrow money and swollen corporate treasure chests. Many companies have a lot of cash on hand. There are also ongoing pushes for firms to expand their drug pipelines as patents expire and competition heats up.
By far the biggest potential acquisition currently on the cards is Pfizer(PFE)'s attempt to buy AstraZeneca(AZN) for $106 billion. AstraZeneca's board has rejected Pfizer's bid, and the U.S. company now has until May 26 to change its mind. If it fails, Pfizer then has to decide whether to withdraw or go hostile by making an offer direct to shareholders.