5 Potential Buyout Targets in Biotech - Barron's

Rachael Granby, An SA Editor, on August 17 wrote an article entitled "5 Potential Buyout Targets in Biotech - Barron's", here is:

Bristol-Myers Squibb (BMY) made a $4.5B bid for the shares of ImClone (IMCL) it doesn't already own. Roche Holdings (RHHBY.PK) made a $44B offer for the shares of Genetech (DNA) it doesn't own. Both targets want the bid prices raised. Barron's Lawrence Strauss says these are just the two latest examples of an increasingly common biotech strategy to use mergers, buyouts, and takeovers as a way to fatten product pipeline (and profit) by acquiring promising and pre-tested biotech drugs.

Big Pharma is feeling the need to find new products with blockbuster potential as several important drugs approach the expiration of their patent protection. This, of course, will open the market to cheaper, generic versions of the drug, cutting into Big Pharma profit. Leading the pack will be Pfizer's (PFE) cholesterol drug, Lipitor, which generated more than $12B in global sales last year. Other companies with expiring blockbuster patents include Wyeth (WYE), Merck (MRK), and Eli Lilly (LLY). Jay Markowitz, a T. Rowe Price health-care analyst, notes "a number of companies are facing a significant patent cliff, where billions in revenues are going to disappear."

Many large pharmaceuticals have lots of cash on their balance sheets, making acquisitions an affordable option. The weaker dollar has also made U.S. companies look more attractive to biotech and pharmaceutical firms abroad. Another major factor is the difficult process of receiving FDA approval. This lengthy and grueling process provides an additional incentive to buy companies that have already received FDA approval on their drugs, ensuring smooth pipeline production going forward.

Potential buyout targets to keep an eye on: Amylin Pharmaceuticals (AMLN), United Therapeutics (UTHR), Alexion Pharmaceuticals (ALXN), Onyx Pharmaceuticals (ONXX), Vertex Pharmaceuticals (VRTX).

As writen by valleywag.com, Genentech(DNA) laughs off $43.7 billion buyout offer. The Company Location is just a few miles north of Google that pulls in more than $10 billion a year selling drugs.


Genentech makes the cancer treatment Avastin, the arthritis and lymphoma drug Rituxan, and the breast cancer fighter Herceptin, each of which bring in a few billion a year. Its stock, which trades under the symbol DNA, nearly touched $100 a share yesterday, a three-year high. Market cap is just over $100 billion, not far behind Google's $118 billion. Once you know all that, it's not surprising that the company nixed a buyout offer from Roche, its majority shareholder. San Francisco's bid to become the world's biotech center is moving more slowly than planned, but just you wait another ten years. These little drug companies are going to get a lot bigger.

Related Posts :

Please Note!
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.

You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.