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Biotech / Medical : Munch-a-Biotech Today
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To: JOEBT1 who wrote (285)3/18/1999 3:46:00 PM
From: Biomaven  Read Replies (1) of 3158
 
Joebt1,

You raise a good point of "why buy when you can partner?"

Historically, we have of course seen partnering rather than buying as the dominant mode. Why then do I suspect this might now change?

Part of the reason is that the rewards of partnering seem to have declined for both parties. Big pharmas that have thin pipelines don't seem to be always able to point to their partnered projects as part of their pipeline, and the street no longer buys partnering biobucks as validation of the biotechs.

Secondly, approved products have more value in the hands of the big pharma than in those of small biotechs. As increasing numbers of biotechs have approved products, so they become more desirable prey for the pharma.

Thirdly, the capital markets are increasingly tough on the third and some second tiers, meaning they are more willing than in the past to be acquired.

For the first time now we also have a respectable number of announced hunters - more than half a dozen, as well as an unknown number of un-announced ones (note that neither GILD or WLA had made any mention of possible acquisitions).

I don't view the big pharma as having been particularly inept so far in avoiding acquisitions; it's just that I think they could now do well for themselves by some selective acquisitions instead of partnering. From the biotech viewpoint the issue is whether a couple more acquisitions might produce a feeding frenzy. Not real likely, but I can certainly hope. <G>

Peter
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