Are the big M&A players in biopharma waiting out the bear market?

One of the market themes that emerged in 2015 was that a marquee biotech player like Celgene ($CELG) could get a boost out of a high-profile acquisition--just as Big Pharmas like Roche ($RHHBY) and Eli Lilly ($LLY) remained aloof to the ever-rising, jaw-dropping price tags tied to drug pipelines after a three-year bull market.

Now, though, with industry share prices in a savage spiral, some top execs in the industry voted most likely to ink new deals are adopting a wary attitude as they wait for the dust to settle.

"It's true that the value of biotech companies has come down in the last six months," Sanofi ($SNY) CEO Olivier Brandicourt noted in a call with analysts today. It's also true, he added, that the same valuations had risen "dramatically" over the three to four years before the bear market stepped in. 

As a result, the newly recruited CEO adopted a ready but not overeager attitude to M&A, saying the company will remain "vigilant," "agile" and "flexible" as they prepare to act on opportunities later this year. 

Translation: Let's wait and see how this M&A game develops.

The Wall Street Journal's Charley Grant picked up on the new environment for deals in a piece on Monday, noting that just about everyone has been waiting for Gilead ($GILD)--sitting on $26 billion in cash--to pull off a big buyout. But even after seeing its own share price slide, the biotech giant is doing better than the Nasdaq biotech index, down 40% from last summer's peak and falling further with every passing day.

Gilead, Biogen ($BIIB)--which has a few billion dollars of its own and access to much more--Sanofi and others are all in the same boat, looking at aging franchises beginning to wilt, or already well past their prime, and needing to do acquisitions and new collaborations to provide evidence of blockbuster ambitions that can swell profits in the future. But falling share prices have put a new emphasis on timing the deal and looking for better prices. 

"Gilead is bound to open its wallet at some point," Grant notes. "But as long as stock-market action like Monday's is the norm, waiting only increases the bang Gilead will eventually get for its buck."

And the same goes for everyone else that the company might face in a bidding war.

- here's the piece from the Wall Street Journal

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