Genzyme General's planned acquisition of GelTex Pharmaceuticals Inc. and Elan Corp. plc's deal to take over Dura Pharmaceuticals Inc. illustrate the diverse reasons that companies do acquisitions and their differing growth strategies, as well as their differing tolerance for the time it takes to monetize the purchased assets. Thus while both deals last week represent big cap companies purchasing mid-cap companies with multiple products on the market, the similarities end there.

For ELN, the $1.8 billion stock acquisition of DURA represents the biggest of its many purchases. Since kick-starting its acquisition binge in 1996 with the $638 million takeover of Athena Neurosciences Inc., ELN has spent $4.35 billion on eight acquisitions, including DURA (see "Elan's Quarry", A3). The purchases have transformed ELN's business from that of a narrowly focused drug delivery and manufacturing company into a biopharmaceutical player with a maturing neurological pipeline and strong marketing franchise. Indeed, ELN has picked up about 775 sales reps through the deals, including nearly 500 who will come from DURA (San Diego, Calif.).

In the product area, the DURA piece adds a basket of respiratory and antibiotic products to the cancer and infectious disease assets ELN picked up when it acquired The Liposome Co. in May for $575 million. But the main point of the latest deal is that it beefs up ELN's U.S. sales presence while being quickly accretive - in 2001.

In contrast, GENZ (Cambridge, Mass.) has a longer monetization horizon for its $1 billion takeover of GELX, as GENZ Chairman and CEO Henri Termeer is looking to add a blockbuster size revenue stream and put the company into bigger market segments.

Pavement pounders

The DURA deal will increase ELN's U.S. sales force to more than 1000. The additional reps will provide more push for ELN's nine marketed products. But more importantly, they will ramp up ELN's capacity to sell products that are emerging from the regulatory process.