Monday, May 10, 1999
This report was compiled by BioCentury staff writers Kathryn
Calkins, Steve Edelson, Eric Pierce, Mike Ward, & Ilan Zipkin.
In the wake of the recent deal for Agouron Pharmaceuticals Inc. to be acquired by Warner-Lambert Co., the mounting expectation that Johnson
& Johnson plans to buy Centocor Inc. may raise the prospect that top-tier
biotech is undergoing a new round of takeouts by big pharma.
But biotech's biggest names have strengths and weaknesses in
terms of their attractiveness to big pharma, whose members themselves have widely
differing needs for profit and pipeline enhancements that big biotech might
provide. Thus, it is hard to define a global rationale for the takeout of big
cap biotech by big pharma.
Indeed, the argument can be made that CNTO provides an unusual
acquisition opportunity, while the pursuit of takeouts may be more attractive
to emerging top tier biotechs than to the pharma side.
As noted by Rabobank International analyst Sam Fazeli, a big pharma company might have one or more parochial reasons to take a controlling stake in a biotech company or to acquire one.