John, the takeover rumor hasn't lifted the stock price higher much. Perhaps this is all CNTO will get from JnJ, if the news is true? Having added more (shares and options) this morning when the stock was at 45 1/4, I can't help but feel like greedy jack-ass who may be disappointed at the offer price!
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<<Edit>> I cound this later:
quote.bloomberg.com
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Biotech May See Consolidation as Big Companies Seek New Drugs
Biotech May See Consolidation as Big Companies Seek New Drugs
New York, May 1 (Bloomberg) -- The biotechnology industry may be poised for an unprecedented round of consolidation as large drugmakers such as Johnson & Johnson and Amgen Inc. look to acquisitions to boost their product pipelines and earnings.
Warner-Lambert Co. in January offered $2.1 billion to buy Agouron Pharmaceuticals Inc., maker of one of the world's best- selling AIDS drugs. JNJ, the world's biggest medical products maker, is now in talks to buy Centocor Inc., maker of one of the top-selling heart drugs, according to a person familiar with those talks.
Drugmakers that have said they're looking to grow through acquisitions include Abbott Laboratories, Bristol-Myers Squibb Co. and American Home Products Corp. Big biotechnology companies, including Amgen Inc., Chiron Corp., Genentech Inc. and Immunex Corp., are also looking to buy. ''This is going to be the most dramatic consolidation the industry has ever seen,'' said Jim McCamant, an industry analyst and editor of the Medical Technology Stock Letter. He has been investing in biotech since Genentech's 1980 initial public offering, the industry's first IPO.
While investors see dozens of biotech companies as acquisition targets, Centocor has drawn much attention in recent weeks.
Centocor-J&J
Shares in Centocor, one of only a handful of biotech companies with multiple products on the market, have soared 27 percent during the past two weeks amid speculation that the company will be acquired by J&J, whose products range from Band- Aids and shampoo to surgical equipment.
A person familiar with the talks yesterday said the two companies are close to an agreement, though it could fall through because the two boards have yet to approve it.
J&J wants to boost sales of pharmaceuticals, which are among the most profitable of the thousands of health-care products it markets. Most big drugmakers are also scurrying for new drugs as some of the world's best-selling drugs lose patent protection. ''J&J needs products,'' said Jack Lafferty, an analyst with U.S. Trust, which holds shares in J&J and other drugmakers, in an interview recently. ''It's not as if there isn't some competition. Whatever they do, they're going to have to pay for it.''
Merck & Co.'s Vasotec, a high-blood-pressure drug with $2.4 billion in 1998 sales, will likely have competition from cheaper generics next year. And blockbusters such as Eli Lilly & Co.'s top-selling anti-depressant Prozac and Schering-Plough Corp.'s Claritin will also likely face generic competition in coming years.
While J&J declined to comment on Centocor, the company has said it constantly reviews such opportunities. Centocor President Joseph Scodari declined to comment, saying it's company policy not to discuss speculation. ''We have done a review of essentially every potential acquisition target on the face of the earth,'' JNJ Chairman and Chief Executive Ralph Larsen has said. ''If we didn't do that, there would be something wrong with us.''
Biotech Egos
Biotechnology has been through less consolidation than other industries in recent years as it's been tough to find combinations that boost profit of the acquirer since most biotech companies are unprofitable.
And egos have also gotten in the way of potential deals because few biotech chief executives have been willing to step down, investment bankers have said.
Attitudes have changes in the past few years as biotech CEOs have grown weary of repeatedly seeking new financing to keep money-losing companies running until they become profitable.
Profitable biotech companies face challenges as well. They're under pressure from investors to develop new products, while keeping sales and profits growing. ''There are very few companies that are maturing rising stars that would continue on their own for very long,'' said Viren Mehta, an analyst with Mehta Partners. ''They are facing heavy investments while trying to balance investor demand for predictable and rising earnings to maintain their high multiples.''
While some big biotech companies have chosen to sell themselves, others like Amgen and Chiron Corp. appear to want to become consolidators.
Amgen is under pressure from investors to develop new products to keep profit growth soaring as its blockbusters Epogen and Neupogen mature. And Chiron last year got a new CEO, Sean Lance, who is looking to acquisitions to help turn the company around after years of lackluster earnings growth.
Potential Matches
One big biotech company that could be acquired is Biogen Inc., maker of Avonex, the best-selling multiple sclerosis treatment in the U.S., said Lance Willsey, a partner with DCF Capital, a $150 million health-care hedge fund.
He said Schering-Plough, which pays Biogen royalties on one of its top-selling drugs, could decide to buy the biotech company so it can stop making those payments.
Another potential match would be for Chiron to buy Cor Therapeutics Inc., whose Integrillin heart drug competes with Centocor's ReoPro, said McCamant. Chiron has said it's looking to boost sales of cardiovascular drugs and the company's chief science officer was one of Cor's founders, he said.
Other likely acquisition targets include companies close to bringing cancer drugs to market, including Onyx Pharmaceuticals Inc., Maxim Pharmaceuticals Inc. and Sugen Inc., McCamant said.
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min. |
