In the pharmaceuticals industry, economic woes are creating a variety of reactions among players ranging from drug titans to precarious start-up labs. Pocketbooks are either crumbling to ash or opening wide as opportunities arise or disappear.
Big name pharma companies are moving rapidly to snap up bargains — these drugmakers have been hoarding profits in preparation for increasing waves of generic competition and are hungrily taking advantage of the economic pain of pharmaceutical brethren large and small.
Johnson & Johnson has taken two leaps in the last month — just this week the huge drug and consumer products company agreed to purchase breast implant maker Mentor for nearly $1.1 billion, pushing to grow in the recently entered aesthetics field. The Mentor deal follows closely on the heels of J&J’s $438 million agreement to buy Omrix Biopharmaceuticals, a maker of hemostasis (blood-loss controlling) products.
While consumer spending in the area of aesthetics is understandably at a downturn, J&J is banking on the inevitable return of copious vanity. The company’s addition of the beleaguered Mentor, which also makes facial implants and liposuction systems, will bring it into head-on competition with Allergan, the maker of Botox and other popular aesthetic devices and Mentor’s main rival in the breast implant market. The move makes bargain-hunting sense, as the number of patients willingly seeking cosmetic procedures over the next few years is anticipated to increase rapidly.
The week of Thanksgiving also revealed Roche’s desire to create deal-making memories, as the company agreed to acquire Alzheimer’s research firm Memory Pharmaceuticals with hopes of growing in the competitive central nervous system (CNS) development field. (While Roche may appear to be moving on, don’t be fooled, the company is still clinging to the dream of taking full control of Genentech.) Other announced deals include King Pharmaceuticals’ wrangled agreement to acquire pain medicine maker Alpharma.
Biotech firms that are not being snapped up by larger companies are either avidly wooing possible financiers or sinking into inactivity. Memory’s marriage to Roche is one example of big pharma playing savior, as is GlaxoSmithKline rescue of infectious-disease treatment developer Genelabs.
Several large deals have also closed this month: Eli Lilly completed its $6.5 billion coup of ImClone in record time, and Daiichi Sankyo spent some $4.1 billion to take control of Ranbaxy Laboratories despite rumors of roadblocks.
More cosmetic changes in the industry are sure to come.
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