After an historic year of $605 billion M&A deals in the biotech sector, the buyout trend is far from over. As biotech stocks slide, larger companies flush with cash are looking to take advantage of cheap stocks in an effort to strengthen aging pipelines, survive patent expirations and adopt new innovation for stronger long-term growth.
AbbVie (ABBV) – for example – just bought cancer drug maker, Stemcentrx for $5.8 billion as it seeks new revenue sources prior to its patent expiration on its $14 billion a year Humira drug. Companies with innovative cancer drugs – especially those involved with immune-therapy – have been attractive buy targets.
Even Abbott Laboratories (ABT) just agreed to buy St. Jude Medical (STJ) for $25 billion. In doing so, ABT can now capture a bigger position across the market for cardiovascular devices with expected sales of $8.7 billion.
There’s even a big buyout war for Medivation (MDVN).
Among the many major companies wanting to buy MDVN, Pfizer (PFE) just approached the company, raising the possibility of another offer rivaling the $9.3 billion offer by Sanofi, which was promptly rejected. Medivation is best known for its oncology drug, which treats prostate cancer.
Investors that believe the biotech boom has ended aren’t paying much attention.