Crisis will spur new biotech deals on worse terms

Lots of folks have been looking for the glimmer of a silver lining in the immense cloud hanging over global financial markets. They might look no further than Big Pharma. According to a new Datamonitor report, cash-rich drugmakers are poised to take advantage of the credit crunch, in part because they didn't overdose on the cheap debt that has trapped so many companies now that credit has dried up.

How might this play out for pharma? Acquisitions and licensing deals, Datamonitor says. We all know that drugmakers have been looking to thicken up their pipelines by buying up biotech companies, licensing biotech drugs, and otherwise setting up development deals with the smaller, more innovative firms. And with so many drugmakers--not to mention private equity firms and other investors--chasing these deals, prices have been pretty favorable for biotech.

Now, that could change. Biotech companies are getting caught in the credit crunch, watching their access to capital dry up. And Big Pharma has cash. Biotech could be forced to take less favorable terms in licensing deals, Datamonitor predicts. Either way, pharma is sure to use the market turmoil to snap up their favorite biotechs and biotech products. "[T]he credit crunch provides big pharma with exactly the opportunity it needs to rebuild its ailing pipelines," the report concludes.

- check out the Datamonitor release [1]

Related Articles:
Economy catches up with biotech investing [2]
Venture funds hit the brakes on biotech investing [3]
Economic crisis rips biotech's bargaining position [4]
Pharma's deep pockets means more M&A [5]
Pharma cash to feed more M&A [6]
Bid-happy analysts play matchup [7]