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Biotech / Medical : Munch-a-Biotech Today -- Ignore unavailable to you. Want to Upgrade?

To: aknahow who wrote (295)	3/19/1999 11:07:00 PM
From: tommysdad	Read Replies (1) \| Respond to of 3158

<<I am looking for reasons they are not really that attractive. >> (a) Management at the biotech. (b) Renting employees and later terminating a collaboration is cheaper than buying a company and later "optimizing synergies". (c) The $50M deals you read about are illusory. Usually, it's a few million up front -- often acquiring equity -- and the tens of millions only materializes with successful products. If the product(s) doesn't pan out, you're out <$5M. If you buy the company and it flops (can you say, "Hybritech"?), you're out a lot more than that. (d) If the biotech has several collaborations with other pharmaceutical companies, you end up buying a company without having access to all of its technology -- in effect having a collaboration with competitors. (e) Signing collaborative agreements can often be accomplished at the division or Vice President level. Buying a company outright almost always requires getting the BOD to sign on. Not trying to rain on this thread's parade: I think there are a lot of compelling reasons to buy certain companies outright. But like most things, it's not always that simple.