Bill Wexler's Dog Pound Message Board

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Non-Tech : Bill Wexler's Dog Pound

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To: Biomaven who wrote (8050)	7/6/2001 8:45:28 PM
From: Hank	Read Replies (2) of 10293

"When there are acquisitions, they tend to be at a significant premium and way above the target's lows. The pharma's certainly don't fire the people at the companies they acquire - there's not been one example of this that I know of and I've been tracking all pharma acquisitions for quite a while." How long is "quite a while"? A prime example would be the acquisition of Sterling-Winthrop Pharmaceuticals by Sanofi back in 1994. Sanofi bought Sterling from Eastman-Kodak shortly after Sterling had built a state of the art research facility in Collegeville, PA. However, Sanofi couldn't afford to keep that facility running in addition to the one they already had in France. So, Sanofi fired around 500 Sterling scientists and sold the facility to SmithKline Beecham for about a third of what it cost to build. In the end, all Sanofi wanted and kept was the prescription drugs that were already on the market. When Glaxo took over Wellcome, they fired everybody at Wellcome and made them re-apply for their jobs so Glaxo could pick and choose who they wanted to keep. I undertsand the same thing is about to happen with the BMY takeover of Dupont's pharmaceutical group. With respect to your comment regarding biotech/large pharma deals, I think we are essentially on the same page but for different reasons. My guess is that only 10%-20% of all start up biotechs that focus on drug discovery will ever survive long term. Big pharma knows this but they also know that they can't afford not to keep their finger in what smaller companies are doing. So, they strike deals with a large number of companies in order to increase the odds that at least one or more deals will pan out. They can do this because they have the money to do this. With a little biotech, it's either hit or miss, period. They can only strike deals with large pharma in return for funding. They certainly don't have the capital be the financer. That's what I mean when I say a 100 million dollar company doesn't stand a chance against a 250 billion dollar company. It's survival of the fittest and the big guys are here to stay. Trying to pick which of the small guys will still be around 20 years from now is like rolling the dice at the casino.

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