DealZone

The next best drug deal

USA/After eight months of playing hard to get, cancer drug maker Genentech has agreed to be bought by Roche for $95 per share — a price Roche didn’t think it would have to pay. The strength of the dollar makes the deal even more expensive for Switzerland-based Roche, but it may feel it got off easy, given talk that Genentech management might hold out for as much as $120 per share.

Following Pfizer‘s bid for Wyeth and Merck‘s offer for Schering-Plough, that makes nearly $160 billion in Big Pharma deals so far this year. The last two big U.S. pure pharma companies still unattached are Bristol-Myers Squibb and Eli Lilly. Both are probably feeling a bit lonely, particularly Bristol, which installed a dealmaker CEO a couple of years ago.

Bristol and Lilly, the grande dames of the industry, face increasing competition from generics and are struggling to keep their pipelines pumped up. They’ve been hunting for exciting biotechs and makers of hot new biologic drugs, preferably in cancer or another big disease market, as a matter of survival. Lilly already has some exposure here, having bought Erbitux maker ImClone last year for a far less exciting $6.5 billion.

Genentech’s demise leaves Amgen as the big biotech in the living room. At about $50 billion, it’s half the size of Genentech, but $10 billion bigger than Bristol Myers and worth $15 billion more than Lilly. There are plenty of smaller, potentially riskier biotechs out there, but maybe Not-So-Big Pharma will have to compete with bigger biotechs in the Darwinian drive for the next best drug.

Other Deals of the Day:

* Gilead Sciences agreed to acquire CV Therapeutics for $20.00 per share, in a transaction it said was valued at about $1.4 billion.

Man of Mystery

(Thanks to reader Bob, who caught the timeline errors in our first entry)

icahnb.jpgEli Lilly shareholders must have an itchy rash on their heads. Their management is set to pay a hefty $70 per share for cancer drug maker ImClone to rival a sweetened $62 per share bid from Bristol Myers that mercurial investor Carl Icahn has apparently whipped out. The mystery bidder has already completed due diligence and has the cash on hand to manage the deal. Analysts, generally unconvinced that this is a great strategic deal for Lilly. Shareholders could be less likely Lilly has a stomach for a bidding war if Bristol comes back. 

Austin PowersIcahn had called Bristol-Myers’ offer, which was increased by $2 per share, “absurd”, and ImClone says the unnamed suitor, who wants to remain shadowy until negotiations are over, does not need financing to put together the $6.1 billion-topping offer.

It seems fitting that the takeover of ImClone should be shrouded in intrigue. Founder Sam Waksal and his friend style icon Martha Stewart went to jail for lying to investigators over suspicious trading in its stock, and Carl Icahn brings his own mercurial blend of color and drama to the scene. One might find it poetic that the identity of this bidder is another stodgy old drug company rather than a media mogul, a style celeb or a flamboyant financier.