Merck Reportedly Close to Acquiring EyeBio for $1.3 Billion to Expand Eye Care Market Presence – Merck & Co (NYSE:MRK)

Merck & Co., Inc. (NYSE:MRK) is reportedly on the verge of being acquired OkoBio, an eye medicine company, for $1.3 billion. This acquisition is expected to significantly expand Merck’s presence in the rapidly growing eye care market.

What happened: In a deal that could be announced as soon as Wednesday, Merck will pay $1.3 billion in cash upfront to acquire EyeBio, a privately held biotechnology company. Merck could also make additional payments of up to $1.7 billion, depending on the achievement of certain key goals, The Wall Street Journal reported Tuesday, citing people familiar with the matter.

EyeBio’s lead drug, Restoret, is currently being developed to treat a variety of eye diseases, including a form of age-related macular degeneration (AMD), which can lead to blurred vision and potential blindness. The drug recently underwent mid-phase testing for wet AMD and another eye disease called diabetic macular edema.

According to Grand View Research, the global AMD market is expected to exceed $18 billion by 2030, up from more than $10 billion in 2022.

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Why is it important?: This acquisition marks a strategic move by Merck to diversify its portfolio beyond its top-selling cancer immunotherapy Keytruda. Keytruda accounted for more than 40% of Merck’s $60 billion in sales last year. The drug is expected to lose major patent protection in 2028, prompting Merck to look for other sources of revenue.

Merck is actively trying to reduce its dependence on Keytruda with recent acquisitions, including the $10.8 billion purchase of an immune drug developer Biological Sciences of Prometheus and acquiring the company for $11.5 billion Acceleron Pharma in 2021

Merck’s entry into the eye care market is part of a broader trend in the pharmaceutical sector in which companies are seeking to diversify through relatively smaller-scale deals to prepare for upcoming patent cliffs.

Other recent notable acquisitions in the eye care market include Bausch + Lomb’s acquisition of a dry eye drug from Novartis for $1.75 billion and Japan’s Astellas Pharma’s acquisition of Iveric Bio for approximately $5.9 billion.

Moreover, Merck’s efforts to expand its portfolio are part of a broader industry trend. In 2023 AstraZeneca, MerckAND GSK has entered into record licensing agreements with Chinese drugmakers, highlighting the concerted efforts of major pharmaceutical companies to diversify and expand their offerings.

Reduction: Despite recent acquisitions, Merck shares have been underperforming, falling 7.5% in the last month. However, over the last five days, the company’s stock has gained 2.3%.

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Image via Pixabay

This story was generated by Benzinga Neuro and edited by Kaustubh Bagalkote