Analysts have described the potential merger between Bristol-Myers Squibb and AstraZeneca PLC as "strange." Reports indicate that AstraZeneca and Bristol-Myers Squibb are in talks to merge, aiming to become one of the world's largest pharmaceutical companies and a dominant force in cancer treatments.

Following the media report on Sunday, which noted the discussions are at an early stage, AstraZeneca shares dropped nearly 5%, while Bristol-Myers Squibb shares rose 5%. AstraZeneca declined to comment, and Bristol-Myers Squibb has not yet responded.

Analysts point out that both companies are already leaders in oncology, and a merger could create "an oncology giant," particularly across four hot areas of drug development: immuno-oncology, targeted therapies, antibody-drug conjugates, and hematologic oncology, according to RBC Capital Markets analyst Trung Huynh.

Given the scale of both companies' cancer businesses, analysts believe any deal would face significant regulatory hurdles, both in the United States, where Bristol-Myers Squibb is based, and in the United Kingdom, home to AstraZeneca. In 2025, cancer drugs accounted for 44% of AstraZeneca's revenue, while Bristol-Myers Squibb's oncology business contributes roughly half of its sales.

"The combined oncology scale would likely raise genuine antitrust concerns," Huynh wrote in a report. "Expect a lengthy review and potential divestitures."

Bank of America analysts, led by Sachin Jain, used the term "strange" to describe the potential combination for both companies. Jain noted that AstraZeneca investors may worry this could be viewed as a sign of a lack of confidence in its pipeline. This comment is particularly striking given the rare late-stage trial failure of its heart drug Wainua in patients with transthyretin-mediated cardiomyopathy last month.

However, analysts say it is also surprising that Bristol-Myers Squibb would enter merger talks, as it has a significant number of market-moving catalysts expected in the coming year. These include readouts for the idiopathic pulmonary fibrosis drug admilparant, the anticoagulant milvexian, and Cobenfy, which is already approved for schizophrenia and is being evaluated for Alzheimer's disease dementia-related psychosis.

Bristol-Myers Squibb shares have surged 22% year-to-date, while AstraZeneca shares have fallen 7%. Jefferies analysts, led by Michael Leuchten, share a similar view. "We are somewhat puzzled by this news," they wrote. "Of course, financial accretion might look good, and perhaps more cash generation could support more R&D. But if there is a company that doesn't need financial engineering, we think it's AstraZeneca."

Nevertheless, the obvious appeal lies in valuation. According to FactSet data, Bristol-Myers Squibb trades at 10 times estimated 2027 earnings, compared to AstraZeneca's 14 times. But it is cheap for a reason—patent expirations are looming.