Will Abbott spinoff become Big Pharma's next big M&A target?

Abbott's ($ABT) plan to spin off its biopharma business into a separate, and as yet unnamed, unit looks to some analysts less like a neatly wrapped present waiting for a Big Pharma player to come along and snap it up. And this deal could go down somewhere in the pricey neighborhood of $54 billion.

Jefferies' Jeffrey Holford did some quick math and concluded that with Humira bringing in $6.5 billion a year, Merck ($MRK), Roche and Bayer could all be potential bidders, according to a report in Bloomberg. And Abbott's pipeline of clinical-stage therapies for hepatitis C, kidney disease and MS will all help add to the allure.

The drug spinoff "is likely to be an attractive target," Holford tells Bloomberg, which avidly tracks such speculation. "This will be a fairly clean, stand-alone unit, the type that gets picked up."

Abbott has successors to Humira in the pipeline, such as the late-stage kidney drug bardoxolone. But Catherine Arnold at Credit Suisse notes sensibly that experimental drugs always represent something of a crap shoot, creating hard-to-value assets. Abbott certainly valued bardoxolone, though. It agreed to pay Irving, TX-based Reata $450 million in upfront and near-term milestones to grab commercialization rights. 

Yesterday the smart initial analyses of the Abbott split focused on the fact that biopharma, with all its competitive uncertainties and clinical-stage risk, is being spun out specifically to free the mother ship of a troublesome business that was holding back its stock price. But there are a number of big players who still like this game and its future. We'll see now if the Abbott move is an opportunity for more consolidation as Big Pharma scrambles to stay off the precipice of the patent cliff or a chance to see a more vigorous drug developer emerge with an active game plan for deals of its own.

- here's the story from Bloomberg

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