Medco CEO David Snow keeps close tabs on the blockbuster drugs which are about to face generic competition. And the PBM chief has also done the math on biotech drugs, which will steadily swell from today's 17 percent of total drug spending to 50 percent in 2020--just nine years. Put those two trends together and you have a potent fuel firing up an interest in biotech M&A that will leave every big player--from Human Genome Sciences to Amgen--and a host of small ones in line for a potential Big Pharma buyout offer.
"Large brand manufacturers are going to be acquisitive when it comes to biotech companies. You're going to find all the big manufacturers are going to have deep capability in biotech," Snow said at the Reuters Health Summit. "Literally it's possible for any biotech manufacturer that's a pure play today" to be a takeover target at the moment. You have to become awfully large to be unaffordable--there's lots of cash, lots of capital out there for acquisitions.
Back in January at the JP Morgan confab a number of deal-makers in the business confidently predicted that we would see a significant wave of buyout deals in the first half of the year, with the possibility that the spike in M&A activity would spill into the second half as well. That wasn't wishful thinking. Aside from the Genzyme buyout the biotech industry has seen a large number of takeovers, driven at least in part by the absence of a viable IPO option and pharma's interest in snagging important new products for its pipeline while they are still sitting on a large pile of blockbuster revenue.
- here's the story from Reuters