Biogen Idec abandons its search for a buyer

It was just October, when Biogen Idec announced it was looking for a buyer, that everyone was hot and bothered about the prospects of a big deal. In particular, Pfizer — with so much of its profit depending on drugs soon to lose patent protection — was mentioned as a possible suitor. Pfizer could use a nice healthy biotech, so the conventional wisdom went, to shore up its pipeline and its portfolio of marketed products, and, more importantly, it had the cash to buy. Sanofi-Aventis was another frequently mentioned name.

Plus, Carl Icahn — the man behind AstraZeneca’s $15 billion purchase of biotech MedImmune — had been agitating for a sellout, and had reportedly put up a $23 billion bid for Biogen Idec himself. Biogen Idec’s stock soared amidst all the speculation.

Now, two months later, all that speculation has come to nothing. Biogen Idec announced Wednesday that it couldn’t seal a deal and would remain an independent company.

So what happened? Well, it looks like a number of things contributed to Biogen’s Idec’s inability to make a match:

• Soon after making its decision to pursue a sale of the company, Biogen Idec released disappointing third-quarter results that may have made prospective suitors nervous.
• Those same suitors could also have been scared off by co-marketing deals with Genentech and Elan, under which the latter companies have options to acquire the rights to key Biogen Idec drugs in the case of a buyout.
• Third, the company’s multiple sclerosis drug Tysabri has struggled with safety issues, having been pulled off the market temporarily in 2005 when some patients developed a fatal neurological condition; it was reintroduced the next year under a risk management plan.
• And finally, Biogen Idec’s soaring stock price may have simply made the company too expensive, especially considering some of the drawbacks mentioned above. Sanofi-Aventis CEO Gerard Le Fur, for example, went so far as to admit publicly in November that “the price is a little high.”

And so, Biogen Idec remains single, and Pfizer remains without a significant biotech operation, though it’s trying. The generic woes of Pfizer and the rest of Big Pharma still loom large, and as the Wall Street Journal reported last week, the druggernauts will have to revise their business plans significantly — by expanding into biotech or significantly restructuring their operations — to survive the potentially lean years ahead. At least for now, they’ll have to do it without Biogen Idec as a partner.