Biotech consolidation picks up with $6.4bn deal
pharmafile | October 29, 2003 | News story | |
The recent run of biotech consolidation has stepped up a gear as Biogen and Idec have agreed a $6.4 billion merger, the sector largest deal for 18 months.
Shares in both companies fell by 5% as investors questioned whether the deal, the second biggest the sector has ever seen, would bring them sufficient value.
Viren Mehta, a principal of Mehta Partners, told Reuters: "The companies are merging out of necessity because sales of their top-selling medicines are stagnating and they have a shortage of early-stage experimental medicines in their pipelines."
Both the Biogen-discovered blockbuster multiple sclerosis treatment Avonex and Idec's non-Hodgkin's lymphoma treatment Rituxan have seen their sales growth slow in recent years.
Avonex has faced increasing competition from Serono's Rebif, while sales growth of Idec's Rituxan slowed by 83% in the first quarter of 2001, by 39% in 2002 and 32% this year.
The companies' management said the deal was a particularly good fit and would bring cost-savings of more than $475 million by 2007 and increased investment in R&D to more than $500 million.
William Rastetter, Chairman and Chief Executive of Biogen, said: "Biogen and Idec are two remarkably complementary companies in virtually every sense therapeutic focus, R&D capabilities, manufacturing infrastructure and financial position."
The new combination, which will be known as Biogen Idec Inc, will become the world third largest biotech company, behind Amgen and Genentech, and employ around 1,000 people.
The creation of Biogen Idec follows a spate of recent activity in the UK, including Celltech acquisition of Oxford GlycoSciences and British Biotech tie-up with RiboTargets.
