nova

Biopharma: Instead of M&A, Think P&A

I see very few M@A going forward.

Yes indeed, big Pharma has cash but
- they do not have brains
- the present political environment in the USA is so uncertain, it is very difficult to plan ahead.

Consequently, any acquired company must have very specific & attractive features to be a target for the next 3-8 months.

5 Potential Buyout Targets in Biotech - Barron's

Unfortunately, American Big Pharma companies became more marketing organizations rather than new drug development companies.

It appears that, at the time when companies like ImClone are developing new super-drugs like Erbitux capable of savings thousands of lives, the Wall Street green-mailers, speculators, extortionists and biotech companies stock price manipulations greatly endanger new drugs development process doing great disservice to people all around world.

The above article is discussing how Big Pharma, with their zillion-dollars executives compensation packages, has failed in development of drugs and now is in a process of ripping off the most innovative and successful biotech companies and its shareholders.

These Big Pharma acquisition activities add nothing to new drug development but greatly endanger so many lives that could be saved by new drugs.

Biotech Buying Binge About to Begin?

Presently Big Pharma companies suffer from lack of vision. They became drug marketing companies.

Dealing with biotech companies, Big Pharma can either acquire biotech or have a partnership agreement.

A good partnership has many advantages:
- it removes a lot of risk for Big Pharma, i.e., they do not have to pay a lot for buying a failure
- they can buy a partner at a later date

The only problem with a partnership is when a biotech has good management and is more than one drug company. In this case, an acquisition at a later date may be impossible.

The best acquisition candidates are biotech companies with a very good pipeline and bad management. The best names coming to my mind are AMLN and IMCL.

Finally, with falling US$ , I would expect a strong acquisition drive by foreign companies. They can afford the best [such as DNA by Roche, MLNM by Toshiba, etc.,]