This is an extract from wealth daily. It reinforces my opinion that Sanofi Aventis will take a blocking stake in UNI either they are starting to do now or at time of NASDAQ listing. If they dont then the latest analyst report on uni would not be correct in stating that UNI had had access to Sanofi Aventis production lines and this was a high barrier to competitors entry . i.e if Sanofi Aventis do not own part of UNI it is in Sanofi Aventis interest to let everyone attempting to design a better RTF syringe access to their production lines .If on the other hand Sanofi Aventis do hold a share it is in their interests to block access.
Buyouts Push Biotech Stocks Higher
Nowhere is this more apparent than in the pharmaceutical sector these days, where the big fish — Merck, Johnson & Johnson, and Wyeth, to name a few — have been on a virtual spending spree.
As a result, they've been able to find value in small biotech stocks that the rest of the market didn't see. . . or simply didn't know enough about. Along the way, they have created a steady stream of biotech buyouts, earning some lucky shareholders triple-digit gains in the blink of an eye.
Take Sirtus Pharmaceuticals, for instance: in many ways, the biotech bull market gathered steam with them 18 months ago.
Their share price doubled overnight when GlaxoSmithKline (GSK) stepped in and bought the budding biotech for $720 million. Sirtus's market cap was half that amount before this occurred, as investors failed to see the same promise that Big Pharma did.
In short, GSK wanted access to Sirtus's research on Sirtuins, a class of enzymes thought to be involved in the aging process — a blockbuster story if there ever was one. In fact, the Sirtus story was so big that 60 Minutes reported on it, referring to the discovery as akin to the fountain of youth.
Not too long after, GSK jumped to the head of the line, setting the price in the process.
Since then the rest of Big Pharma has followed them — not out of envy, mind you. . . but out of necessity.
That's because the big pharmaceutical companies are staring down shrinking pipelines and a flood of generic competition. As a result, they have had to use biotech buyouts to jump-start their own research and development.
It's either that. . . or these companies suffer via sagging sales, as we learned last week when Johnson & Johnson (JNJ) reported.
Sales in its drug business dropped in part when generic competition hammered two of JNJ's biggest drugs. Specifically, sales of Topamax and Risperal fell 88 percent and 71 percent respectively, as their patents expired.
That may be why JNJ bought an 18 percent stake in Crucell last month for $444 million, and why they picked up Cougar Biotech in May for $1 billion.
For their part, JNJ and GSK are only the tip of the iceberg. In their wake, this is a story that seems to play out at least twice a month these days, as biotech buyouts add more fuel the growing bull market.
After all, everything has a price — even lucky tubes of air on eBay.
In future issues, we will be helping you to separate the contenders from the pretenders in this sector.
Add to My Watchlist
What is My Watchlist?
