Genentech Bid Confirms the Trend

Thank you, New York Times. Remember just a couple of weeks ago, when The New York Times wrote about how Genentech's (DNA - commentary - Cramer's Take) Avastin was too expensive and the stock got cracked down to $77? I know Roche did. I bet that was the last draw. The dramatic decline in the dollar plus a sentiment that has spawned a thousand articles -- that life-saving drugs cost too much -- gave the Swiss giant a chance to bolster its own anemic pipeline by buying what may be the greatest wonder drug of all time in its $43 billion bid, no doubt the beginning price for what will ultimately be a deal close to $100 a share. (I pushed DNA hard here and on "Mad Money" because I have been a huge believer in Avastin and I'm confident that people will pay anything -- or family members will pay anything -- for the hope of three or four months or more of life, or the chance of beating cancer altogether.)

I don't even know where to begin about the positives of this deal. First, it confirms the general trend: the dollar is so weak that it is worth buying anything that's name-brand if you are from Europe, including Anheuser-Busch (BUD - commentary - Cramer's Take), a total creature of the weak dollar.

It confirms a second trend that the biotechs are the best buys when it comes to a bank-led slowdown. Just like in 1990, the biotechs -- then led by Amgen (AMGN - commentary - Cramer's Take) -- produced spectacular results as their earnings shined in the face a collapse in the financials. I bought Gilead (GILD - commentary - Cramer's Take) on Friday for Action Alerts PLUS with the trashing it endured because it spent too much -- consider it the Research In Motion (RIMM - commentary - Cramer's Take) of the group. Amgen, coincidentally, has been rallying on a better reimbursement environment from the new Medicare bill, an adjunct to DaVita's (DVA - commentary - Cramer's Take) boost. Don't forget that the whole group is running, including Biogen (BIIB - commentary - Cramer's Take), as the B section of the Journal shows, and Cephalon (CEPH - commentary - Cramer's Take), which seems like nothing but net lately.

Finally, there is the sentiment issue. Every time the press has hit something during this abominable era, it has struck pay dirt. The negativity surrounding DNA was so great that even when it reported better-than-expected earnings, the stock took a hit initially until people realized that Avastin really was growing again. The group is hot, it makes sense, and it should be examined closely as a continual source of gains as we worry about sagging banks and reduced earnings from one of the largest sectors in the market (finance, health care, tech, oil really define this market now).

At the time of publication, Cramer was long Gilead Sciences.

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