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Biotech / Medical : Munch-a-Biotech Today

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From: Icebrg	1/25/2006 6:29:58 PM
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Merck: Ready for a biotech buying spree Looking for firms with stable products and revenue, drugmaker CEO says company has $15B cash on hand to fund acquisitions. January 25, 2006: 3:29 PM EST DAVOS, Switzerland (Reuters) - Merck & Co. Inc. is ready to acquire large biotech companies with established sales to boost its business and swell the pipeline of experimental medicines, its chief executive said Wednesday. "As part of our strategy going forward we are aggressively looking at alliances and joint ventures and acquisitions of biotech companies," Richard Clark told Reuters on the sidelines of the World Economic Forum in Davos. New profit twist Patent losses can decimate sales but drugmakers are finding new ways to wring profits from products. "I'm not only looking for late-stage compounds, or the ability to help our scientific advantage. We're also looking to have a company that has in-line revenue and that has stable products to begin with," he added. Merck -- already hurting from the withdrawal of its Vioxx painkiller and ongoing litigation -- will take a further hit next by the patent expiration in the United States of its Zocor cholesterol fighter. Clark said Merck had made a strategic decision two years ago to be more proactive in partnering with biotech companies than in the past. He declined to say how large an acquisition might be feasible but said the group had substantial financial muscle. "I won't give you a market cap number but we have $15 billion in cash and $5 billion of free cash flow every year. We have an outstanding debt ratio," he said. "Merck has always been very financially conservative in the past, so we can not only fund the dividend and fund the running of the company but we can fund an acquisition," he said. Merck (up $0.40 to $33.18, Research) shares climbed 1 percent in Wednesday afternoon trade on the New York Stock Exchange.

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