SAN FRANCISCO -- I'm attending the Allicense 2014 healthcare deal-making conference organized by Thomson Reuters. The weather here today is incredible. The conference is pretty good, too! Here are some highlights from this morning's panel sessions:
Given the dearth of biotech M&A in what is a record-setting year for healthcare M&A, I asked Bristol-Myers Squibb (BMY) Vice President of Business Development Graham Brazier why Big Pharma doesn't gobble up big-cap biotech companies like Celgene (CELG) or Gilead Sciences (GILD)?
Brazier's response: The current market caps of big-cap biotech companies plus the necessary takeover premiums make them too expensive to buy.
Not an unexpected answer, although it does seem a bit short-sighted, as was pointed out on Twitter:
@adamfeuerstein Must admit, I always find that argument partly flawed; great assets/entities are valuable. Would they rather buy mediocrity?Katrine Bosley (@ksbosley) April 29, 2014
Celgene deal maker George Golumbeski also participated on the panel with Brazier. Golumbeski agreed that price is a factor in Big Pharma's reluctance to acquire Big Biotech, but so too is Big Pharma's "aversion to risk". I'm sort of putting words in Golumbeski's mouth here, but he said Big Pharma is too scared (and too stupid?) to figure out buying Big Biotech would help them out a lot.
I'm not putting words in Golumbeski's mouth when it comes to the way he threw massive shade on Pfizer's (PFE) quest to buy AstraZeneca (AZN) -- a deal he said was driven completely by financial engineering and not innovation.
"If Pfizer really values immuno-oncology, they should be buying Bristol-Myers," said Golumbeski. Pfizer's insistence that buying AstraZeneca is about bolstering its pipeline of innovative drugs is an "outrageous statement," he said.
On the same panel, Mallinckrodt (MNK) Chief Strategy Officer Gary Phillps -- fresh off acquiring Cadence Pharma and Questcor Pharma QCOR - said, "We're not done yet." Generally, he said to expect more deal-making activity from specialty pharma acquirers due to cheap debt and the cost-saving benefits of tax inversions.