Pharma's biotech-buying frenzy is likely to continue for the next few years, analysts say. That's partly because the weak dollar make U.S. biotechs cheaper for foreign drugmakers to buy, partly because the industry has surplus cash around. And, of course, there's the beefing-up-the-pipeline driver, but we're all familiar with that.
"There's a fair bit of money in the industry today, almost creating a pent-up capacity to do deals," a Deloitte life sciences expert told the Associated Press. That, plus the weak dollar and need for new products have created an environment favorable to a "reasonably long period" of M&A activity.
The good news for biotechs: valuations for buyout targets are likely to remain high. Bad news for pharma: the risks are considerable. They're not the kind of deals you can really put a pencil to, one analyst said. "There will be no MBA school analysis that makes any of these (deals) look intelligent," he said. "It's simply a bet of blockbusters coming out of the purchased pipelines." But the risks may be worth it. So watch that wheel spin.
--read the AP story