In analyzing the PowerShares Dynamic Biotech & Genome ETF, a fund made up of primarily small- and medium-cap biotech stocks, Seeking Alpha notes that Big Pharma's appetite for biotech acquisitions is far from satisfied. Despite the fact that Pharma's interest in biotech reached an all-time high last year, the conditions are right for an even bigger run on biotech M&As in the near future. Pharma companies are trying to fill weak pipelines and have the money on hand to do it. Add to that the fact that many small biotechs can be bought for a bargain, and you have the perfect conditions for an M&A free-for-all.
Take, for instance, Takeda's recent $8.8 billion bid for Millennium. That deal, analysts say, could indicate a run of biotech buyouts. A run was also predicted last year with AstraZeneca's $15.6 billion MedImmune buyout, "[b]ut the wave hasn't come, even though Big Pharma is sitting on a pile of cash and struggling with weak pipelines." While there's no question Big Pharma is snapping up promising developers left and right, even more deals could be on the way.
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