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The Editors blog

An inside look at what’s happening within the pharma industry and across the PMGroup from the PMLiVE editorial team

The hunted now hunt: biotechs become buyers

As investor interest in biotech grows, larger companies are competing with pharma to acquire smaller firms

Investor interest in biotech has seen a notable resurgence in the last few months and the sector's improving fortunes may not be all good news for pharma.

Once seen as one of Wall Street's riskiest bets, an eyebrow raising $725m has been poured into 10 biotech flotations in the US this year.

The risks are as high as ever - with only one in 10 biotech companies able to successfully bring a product to market - but the potential for outsized returns means small biotechs are pursuing US initial public offerings at a pace not seen for nearly a decade.

One of the knock-on effects of biotech's improved health is that companies at the larger end of the spectrum, just a short while ago viewed as pharma's takeover targets, are repositioning themselves as buyers.

As Ercument Tokat, a partner and healthcare banker at Centerview Partners, noted at the Reuters Health Summit in New York last month: “In the last few years what has changed quite dramatically is that mid-cap and large-cap biotechs have turned into acquirers. Most of the time in the past, if you were singleproduct biotech with a phase III drug, you were really waiting to be bought.”

Big biotech is still a long way from being the size of big pharma, but it's certainly one to keep an eye on.

Biotech deals feature in our latest Deal Watch article

This blog post first appeared as the Editor's comment in PME June 2013

Article by
David Stone

is editor of PME and Communiqué

19th June 2013

From: Research

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