Merck & Co. has announced a significant $10 billion acquisition of British biopharmaceutical company Verona Pharma, a move that will substantially expand Merck's portfolio in respiratory disease treatments. The deal, finalized at $107 per American depositary share (ADS), represents a 23% premium over Verona’s closing price on July 9, 2025, and is slated for completion in the fourth quarter of the year.
The acquisition centers on Verona Pharma's flagship product, Ohtuvayre, a novel PDE3/4 nebulizer treatment designed for patients suffering from chronic obstructive pulmonary disease (COPD). This condition affects an estimated 11.7 million people in the United States alone, underscoring the importance of advancing effective therapies.
Ohtuvayre operates by blocking the enzymes PDE3 and PDE4, allowing it to function both as an anti-inflammatory agent and a bronchodilator. This dual action relaxes lung muscles and widens airways, offering a promising approach to managing COPD symptoms. Unlike competitors such as Regeneron Pharmaceuticals and Sanofi's Dupixent—an injectable drug targeting a single inflammatory pathway—Ohtuvayre addresses multiple forms of inflammation, a feature that Verona’s executives believe sets it apart in the market.
Financially, Verona Pharma has demonstrated strong commercial momentum. The company reported $42.3 million in sales for Ohtuvayre in 2024. In the first quarter of 2025 alone, Ohtuvayre generated $71.3 million in sales, a 95% sequential increase that far surpassed expectations of $50.3 million. Additionally, approximately 25,000 prescriptions were filled during this period, with Wall Street analysts projecting sales of $91.8 million for the second quarter, reflecting a forecasted 29% growth.
Jefferies, a leading investment firm, recently adjusted its peak sales estimate for Ohtuvayre upward by $1 billion to $4 billion, based on a survey of doctors and market analysis. They describe the drug as "in the midst of having the strongest COPD launch in history." The implied acquisition value, pegged at roughly three times peak sales, suggests Merck is betting on Ohtuvayre's substantial market potential.
Merck's CEO, Robert Davis, emphasized the strategic importance of the acquisition, stating, "Ohtuvayre complements and expands our pipeline and portfolio of treatments for cardio-pulmonary diseases while delivering near- and long-term growth as well as value for shareholders." This acquisition is part of Merck's broader effort to bolster its position in cardio-pulmonary healthcare and reflects confidence in the growth trajectory of respiratory treatments.
The market reacted swiftly to the announcement. Verona Pharma's shares surged over 20%, closing at a record $104.92, while Merck's stock increased by approximately 2%, despite having declined about 16% year-to-date. The enthusiasm for Verona’s stock highlights investor optimism about the deal and the potential for Ohtuvayre to become a blockbuster treatment.
From a regulatory perspective, industry analysts do not anticipate significant hurdles from the Federal Trade Commission, suggesting a smooth path to deal closure. Furthermore, Merck continues to advance its research portfolio; it is set to present new data from its HIV research at the International AIDS Society Conference and has recently received priority review from the FDA for an updated label to its WINREVAIR drug, used in treating pulmonary arterial hypertension. A regulatory decision on that update is expected by late October 2025.
Financial analysts have weighed in on Merck’s broader prospects. UBS has reiterated a Buy rating on Merck, citing the company’s Gardasil vaccine as a key revenue driver, despite some investor skepticism. Meanwhile, TD Cowen has maintained a Hold rating following a favorable advisory committee vote on Merck’s Enflonsia vaccine, which may open new market opportunities.
Verona Pharma’s CEO, David Zaccardelli, expressed optimism about the acquisition’s potential impact, stating, "We believe Merck's commercial footprint and industry-leading clinical capabilities will help accelerate the potential of Ohtuvayre to reach more patients living with COPD. This agreement will enable the strong launch trajectory of this important medicine and provides value to Verona Pharma shareholders." His remarks underscore the anticipated benefits of combining Verona’s innovative treatments with Merck’s extensive commercial and clinical resources.
As the deal moves toward completion in the coming months, all eyes will be on how Merck integrates Verona’s assets and accelerates growth in the respiratory disease market. The acquisition not only broadens Merck’s cardio-pulmonary portfolio but also signals the company’s commitment to addressing chronic diseases with significant unmet medical needs.
In sum, Merck’s $10 billion purchase of Verona Pharma represents a bold step in the pharmaceutical giant’s strategy to enhance its respiratory treatment offerings. With Ohtuvayre’s promising clinical profile and robust sales growth, Merck is positioning itself to make a lasting impact on the COPD treatment landscape, offering hope to millions affected by this challenging condition.
