Stocks and Shares ISA returns by 2035: AZN merger cloud changes the maths

A Stocks and Shares ISA compounding at 9% a year can turn a £10,000 lump sum into roughly £21,000 by 2035, but the stock most often proposed as the engine for those returns, AstraZeneca (AZN), is now carrying a material merger overhang that investors need to price into their thinking.

What the Rule of 72 actually shows for a Stocks and Shares ISA

The arithmetic is straightforward. The Rule of 72 divides 72 by an assumed annual return to estimate how long it takes for money to double. At 9%, the answer is eight years (72 ÷ 9), putting a £10,000 ISA investment at approximately £21,000 by early 2035. Dividends must be reinvested for this to hold, and annual returns will vary, including some negative years.

The more instructive figure comes when regular contributions are added. An investor who puts in a further £300 a month, well below the £20,000 annual ISA allowance, at the same 9% compound rate sees the portfolio grow to approximately £66,000 by 2035. Warren Buffett’s widely shared observation captures the dynamic: ‘Someone’s sitting in the shade today because someone planted a tree long time ago.’

None of this is guaranteed by any single holding. It depends on picking businesses that can actually sustain returns over a decade, which is precisely why the current turbulence around AZN is relevant for ISA investors weighing whether to use it as a core position.

AstraZeneca’s merger talks introduce a new layer of risk

AZN has already fallen 24% since February, slipping behind HSBC and Shell in the FTSE 100 market cap rankings after a handful of late-stage clinical trial setbacks. Then came the merger report. Yahoo Finance reported that AstraZeneca has held talks with Bristol Myers Squibb about a potential combination that would create an entity valued at nearly $400 billion: AstraZeneca at approximately $264 billion and Bristol Myers Squibb adding roughly $133 billion.

The market’s reaction was swift. The Wall Street Journal reported AZN’s London-listed shares fell 6.4% in European morning trading on the day the report emerged; a separate reading from Yahoo Finance and Investing.com put the intraday decline at nearly 7%, with both directionally consistent. Bristol Myers Squibb rose 5.5% in US premarket trading the same day. Neither company confirmed the talks or returned requests for comment from the Financial Times or Reuters.

The antitrust dimension is not trivial. Oncology drugs accounted for more than 40% of Bristol Myers Squibb’s overall sales in the first six months of 2026, and the two companies’ cancer immunotherapies compete directly. CNBC reported that Citi analysts called the talks a ‘surprise’ given AstraZeneca’s ‘best-in-class pipeline,’ while Jefferies said the combined oncology portfolio would likely be the broadest in the industry and could attract antitrust scrutiny.

That scrutiny looks probable. Antitrust lawyer Andre Barlow of DBM Law Group told Reuters: ‘I would expect a Trump FTC to scrutinize the merger, and if there are significant overlaps in certain drugs and late-stage pipeline overlaps, it would require meaningful divestitures.’

The geography of the combination adds another dimension. PharmExec noted that AstraZeneca’s US sales accounted for 42% of total revenues in the first half of 2026, while Bristol Myers Squibb sourced 69% of revenues from the US last quarter. A merger would substantially deepen AstraZeneca’s American commercial presence and would follow AstraZeneca’s completion of a direct NYSE listing earlier in 2026. The deal would also be the largest in the sector since AstraZeneca itself repelled a takeover attempt by Pfizer approximately a dozen years ago.

The standalone case for AZN remains, but it requires patience

Strip out the merger noise, and AZN’s standalone thesis is built on scale and pipeline depth. The company has almost 200 clinical-stage development programmes and has reported positive results from two late-stage lung cancer trials alongside the recent setbacks. Its stated target of $80 billion in annual revenue by 2030 was set against a baseline of $45.8 billion in 2023, representing a planned increase of approximately 75%, and included the launch of an expected 20 new medicines, many with potential to generate more than $5 billion in peak-year revenues. The 2026 revenue figure of $58.7bn confirms the trajectory is moving.

PMLiVE reported that the company targets a core operating margin in the mid-30s percentage range by 2026 and at least the mid-30s beyond that. At 13.8 times next year’s forecast earnings and a 2.2% forward yield, the valuation does not demand perfection.

For an ISA investor with a ten-year view, the question is less whether AZN is cheap and more whether a potential $400 billion merger, with its antitrust hurdles, execution risk, and the history of pharma deals that disappointed, is the vehicle to carry a decade of compounding. The next test is whether either board confirms or walks away from the talks, which will set the range for the stock going into year-end.