Placebo pills?

The number of shareholder rights plans - a.k.a. poison pills - implemented for biotech companies might lead an outsider to believe that the industry is fraught with hostile takeover bids. Last week Triangle (VIRS), a developer of infectious disease therapeutics, CV Therapeutics (CVTX) a cardiovascular therapy company, antimicrobial company Microcide (MCDE), and diagnostics marketers ZymeTx (ZMTX) and Hemagen (HMGN) added themselves to the list of biotechs with poison pills.

The selling point of such plans is to force a hostile bidder to deal with the company's board in order to ensure that shareholders are treated fairly. However, naysayers argue that poison pills also entrench management and protect employees, while doing little to preserve shareholder value...