Monday, September 18, 2000
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
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.
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.