NEW YORK (TheStreet) -- TheStreet's Jim Cramer explains why Shire's  (SHPG)  deal to buy NPS Pharmaceuticals  (NPSP) for $5.2 billion in an all-cash transaction verifies the strategy that many biotech companies have.

Cramer has interviewed NPS CEO Dr. Francois Nader numerous times and Nader has always claimed that the company's orphan drug strategy is a winner. Cramer says the company is working in a lot of diseases that only 4,000 or 5,000 people have, and NPS has come up with formulations that essentially give these people back their lives because they are not tethered to any drug and can go about their business.

Shire came in Monday with its huge bid, and Cramer says this deal verifies NPS' approach. He says he likes this deal because it also verifies the strategy that many biotech companies have, which is why biotech is flying. Cramer says this is "a very big deal" and investors should pay attention to it.

Must Watch: Jim Cramer: Shire-NPS Deal Verifies Strategy of Many Biotechs

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