Merck Acquires Verona Pharma for $10 Billion to Expand Respiratory Treatments

Merck & Co. has announced a definitive agreement to acquire London-based Verona Pharma for approximately $10 billion, aiming to bolster its respiratory treatment portfolio. Under the terms, Merck will pay $107 per American Depositary Share (ADS), each representing eight ordinary shares of Verona Pharma. The acquisition is expected to close in the fourth quarter of 2025, pending regulatory approvals and other customary conditions.

This strategic move grants Merck access to Ohtuvayre (ensifentrine), a first-in-class inhaled therapy for chronic obstructive pulmonary disease (COPD). Ohtuvayre received U.S. Food and Drug Administration (FDA) approval in June 2024 and has been commercially available since August 2024. The drug combines bronchodilator and non-steroidal anti-inflammatory effects, representing the first new inhaled mechanism for COPD treatment in over two decades.

Merck, known as MSD outside the United States and Canada, is a global healthcare company established in 1891. The company is renowned for its contributions to pharmaceuticals, vaccines, and animal health products. One of Merck's most significant products is Keytruda, a blockbuster cancer drug that generated $29.5 billion in revenue in 2024. However, Keytruda's patent is set to expire in 2028, potentially leading to a substantial decline in revenue. To mitigate this impending loss, Merck has been actively pursuing acquisitions to diversify its portfolio and sustain growth. Notable recent acquisitions include Prometheus Biosciences in 2023 and Acceleron Pharma in 2021.

Verona Pharma is a biopharmaceutical company focused on developing and commercializing innovative therapies for respiratory diseases. Since its commercial launch in August 2024, Ohtuvayre has demonstrated strong market performance, with over 25,000 prescriptions filled and net product sales of $36.6 million in the fourth quarter of 2024.

The offer of $107 per ADS represents a 23% premium over Verona's closing price on July 8, 2025, and a 52% premium to the 30-day volume-weighted average price. This valuation underscores Merck's confidence in Ohtuvayre's potential to generate significant revenue and its strategic importance in diversifying Merck's portfolio.

The acquisition of Verona Pharma aligns with Merck's strategy to offset anticipated revenue losses from the impending patent expiration of Keytruda. By adding Ohtuvayre to its portfolio, Merck strengthens its position in the respiratory disease market, a sector with substantial unmet medical needs and growth potential. Ohtuvayre's unique dual mechanism of action offers a differentiated treatment option for COPD patients, potentially capturing a significant market share. Analysts project that Ohtuvayre could achieve annual sales of up to $4 billion by the mid-2030s.

Following the acquisition announcement, Verona Pharma's stock experienced a 20% increase, reflecting investor optimism about the deal's value. Year-to-date, Verona's stock has surged 87%, significantly outperforming the industry average. In contrast, Merck's stock showed a modest increase, indicating a cautious but positive market response.

The acquisition is subject to regulatory approvals and other customary closing conditions. Notably, the UK Takeover Code does not apply to this transaction, as Verona Pharma is not subject to regulation under the City Code on Takeovers and Mergers. Therefore, no dealing disclosures are required under Rule 8 of the UK Takeover Code by shareholders of Verona Pharma or Merck.

COPD is a chronic and progressive lung disease affecting over 14 million adults in the United States alone. The introduction of Ohtuvayre offers a new treatment option for patients who have had limited choices for over two decades. Merck's acquisition of Verona Pharma is expected to enhance the availability and distribution of Ohtuvayre, potentially improving the quality of life for millions of COPD patients. Additionally, the acquisition underscores the pharmaceutical industry's commitment to addressing unmet medical needs through strategic investments and innovation.

Merck's acquisition of Verona Pharma exemplifies the industry's approach to mitigating revenue risks associated with patent expirations. By integrating Ohtuvayre into its portfolio, Merck not only diversifies its offerings but also reinforces its commitment to innovation in addressing chronic diseases like COPD.