For the enterprising pharma giant, it can be hard to branch out into new ailments and treatments. Internal R&D teams aren’t assembled overnight. And snapping up rivals’ drugs only works if one knows enough to pick the right horses, and has the scale to squeeze more sales out of them. GSK’s $10.6bn acquisition of cancer biotech Nuvalent shows the UK drugmaker has finally reached that point in the huge growth area that is oncology.
The deal, GSK’s largest biotech acquisition since it was created in 2000, has the makings of a success. For one thing, Nuvalent’s lung cancer drugs have the potential to offer something new: a treatment that is both well tolerated and effective. That’s in contrast to the company’s last major oncology deal, the $5.1bn acquisition of Tesaro in 2019, which gave GSK a toehold in a class of targeted cancer drugs already dominated by AstraZeneca.
And GSK can, reasonably, make the numbers stack up. To justify the $3bn premium it has paid, it needs to squeeze about $300mn of extra cash from Nuvalent. That doesn’t look implausible. Nuvalent’s standalone peak sales are projected at $4bn, according to Bernstein. Given GSK’s own global footprint, adding perhaps 10 per cent is reasonable: it plans to market Nuvalent’s drugs in China, where air pollution and smoking have resulted in high demand for lung cancer treatments. Meanwhile, GSK is unlikely to need all of Nuvalent’s roughly $350mn expected annual R&D spend.