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Genzyme Sold, Who’s Next?

Now that Genzyme has been acquired by Sanofi-Aventis, money managers have begun asking- where did all that money go? A Dow Jones Newswire article by Steven Russolillo reasoned that arbitrage players who held much of Genzyme shares have been quickly dividing that money between big and small name players for months now.
Still, $20 billion is a considerable sum considering the biotech industry has an aggregate value of only around $350 billion. In the article, analyst Chris Raymond of Robert W. Baird & Co. suggests the best growth value lies in the mid-cap space. This indicates such stocks should have gained from the Genzyme acquisition. Raymond noted BioMarin, Alexion, Human Genome Sciences, and Dendreon in particular could gain from the sale.
I looked at the year-to-date performance of twenty biotech stocks with market caps greater than $1 billion up to February 17th. Ten saw their share prices increase while nine decreased, and one was unchanged. Of the four stocks Raymond suggested would gain from the Genzyme sale, three saw gains- only Dendreon saw a decline in its shares.  
BioMarin is up 2.3%, Alexion up 14.9%, Human Genome Sciences up 8.3%, while Dendreon is down 5.8%. In this period, both the Nasdaq Biotech Index and Amex Biotech Index are basically unchanged.
It would appear Raymond has made some pretty good picks in terms of where the money may have gone in the mid-cap biotech space.
The article also notes good pickings are getting harder to find in the mid-cap space. As I see it, Sanofi’s recent designation of Genzyme as its Orphan drug “center of excellence” only cements pharma’s interest in rare disease drug developers. Another takeout looks all but unavoidable in this space.   

Disclosure: I am long ALXN.