Note to buyout targets: If your price is sub-$3 billion, you're in the running with Big Pharma. Over the last couple of weeks, drugmaker CEOs have been describing their appetites for deals, and that's the consensus, give or take a few hundred million.
Roche ($RHHBY) chief Severin Schwan told Bloomberg that he'd be up for a deal as big as $3 billion. Novartis ($NVS) CEO Joe Jimenez pegged his target at $2 billion to $3 billion. Yesterday, Sanofi ($SNY) CEO Christopher Viehbacher quoted a maximum price of $2.6 billion. And as if to outline the goal in red, Bristol-Myers Squibb ($BMY) agreed to pay $2.5 billion for hepatitis C drug developer Inhibitex ($IHNX).
Pfizer ($PFE) chief Ian Read didn't specify a dollar figure, but said he's in the market for "bolt-on" deals and "disinclined" for a mega-acquisition. Only Merck ($MRK) has been discussing buyouts without attaching a size range: Whatever's necessary, small to large; that's as specific as dealmaking chief Roger Pomerantz cared to get.
The catch is, with so many major drugmakers shopping in the same price range, competition for deals is likely to be tough. One investment banker told Reuters that, in healthcare, "there is a panicky quality to deals" these days, with companies "grabbing at things to avoid being left alone." As Viehbacher told Bloomberg, "[t]he trick in M&A is to go find something not everybody is looking at." For Sanofi, that means companies in countries outside the China-India hot zone, plus animal healthcare. And it means avoiding the hepatitis C business, which is commanding Tiffany-level prices these days.