By Trista Kelley
Merck & Co.’s $41.1 billion purchase of Schering-Plough Corp. fueled speculation it won’t be the last big drug-industry merger.
The deal, which comes on the heels of Pfizer Inc.’s $68 billion bid for Wyeth in January and Roche Holding AG’s $45.7 billion offer for U.S. partner Genentech Inc. last week, will spur other drugmakers fearful of falling behind into action, said David Moskowitz, an analyst with Caris & Co. in Washington, D.C.
Sanofi-Aventis SA may next target Bristol-Myers Squibb Co., which sells the French company’s Plavix blood-thinner and the Avapro hypertension treatment in the U.S. Alternatively, Bristol- Myers may be a potential merger partner for U.K. diabetes drug partner AstraZeneca Plc, said Mirabaud analyst Nick Turner. Johnson & Johnson may make a counter bid for Schering-Plough, Sanford C. Bernstein analyst Tim Anderson wrote in a note to clients.
“Most companies now are pretty cheap, really, and anyone sitting on cash can make a bid,” London-based Turner said today in an interview. “This is a trigger for a wave of mergers and acquisitions in the sector.”
The world’s biggest pharmaceutical companies, hoarding about $100 billion in cash, near cash and marketable securities, are seeking acquisitions to replace products nearing the end of their patent life. Merck’s takeover of Schering-Plough, announced today, would win the U.S. drugmaker a larger experimental pipeline and products unhindered by imminent patent losses.
AstraZeneca Gains
AstraZeneca climbed 76 pence, or 3.5 percent, to 2,223 pence in London trading, the most since Jan. 23, on speculation Bristol-Myers would make a bid. AstraZeneca spokeswoman Sarah Lindgreen said the company doesn’t comment on market speculation. Bristol-Myers spokesman Brian Henry also declined to comment.
Sanofi Chief Executive Officer Chris Viehbacher, while not ruling out a large merger, is looking for “small to medium- sized” acquisitions to replace revenue it expects to lose to generic competition in coming years, the 48-year-old executive said last month.
Viehbacher told CNBC in a March 5 interview that the French company’s partnership with Bristol-Myers is “sufficient” for the time being.
Other drugmakers have said they will avoid large mergers. Andrew Witty, head of GlaxoSmithKline Plc, said last month a large transaction would “distract” the company. Glaxo will rely on agreements valued from about $50 million to the “low billions,” he said in a January interview.
AstraZeneca chief David Brennan also favors licensing deals to shore up its pipeline of new products.
Pfizer has lost 7.5 percent of its value since completing its acquisition of Pharmacia Corp. in 2003. Glaxo’s shares have declined 25 percent since the U.K. drugmaker bought Smithkline Beecham Plc in 2000.
“If you can name a merger that worked, I’ll personally give you a bouquet of flowers,” said Mirabaud’s Turner.
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.