Pfizer, Sanofi, J&J may be among Biogen bidders
Mon Oct 15, 2007 4:48pm EDT
LONDON/BOSTON (Reuters) - Biogen Idec Inc, which has put itself up for sale, may get bids of around $25-30 billion from several of the world's top drugmakers keen to expand in the hot area of biotech medicine.
Pfizer Inc, Sanofi-Aventis SA and Johnson & Johnson could all use the U.S. company to gain scale in protein and antibody drug manufacturing, sales and research, bankers and industry analysts said on Monday.
Roche Holding AG, however, may be less interested -- despite its collaboration with Biogen on cancer drug MabThera/Rituxan -- since it already has a major presence in biotech medicine production.
GlaxoSmithKline Plc, another player with a potential appetite, is also probably not in the running, as it focuses on other priorities, some industry experts said.
Roche's Swiss rival, Novartis AG, has been seen by some analysts as a possible buyer, but it has a competing presence in multiple sclerosis which could rule it out.
Officials at all the firms declined to comment.
"A number of big companies have said recently they don't think they are big enough in biotech yet, so I would think there will be quite a lot of interest," said Paul Diggle of Nomura Code Securities.
Acquiring Biogen will not be cheap, however.
The unexpectedly rich price of $15.6 billion paid for U.S. biotech firm MedImmune by AstraZeneca Plc earlier this year -- equivalent to 11 times annual sales -- showed big pharma's appetite for biotech assets. That same high valuation would value Biogen at about $34 billion.
In practice, analysts believe threats to Biogen's core multiple sclerosis (MS) franchise from new products and the risk of biogeneric competition to its established MS drug Avonex in the years ahead mean a lowlier rating is justified.
TYSABRI WILD CARD
On the plus side, new MS drug Tysabri is now seen by some analysts as a potential multibillion-dollar-a-year seller. Biogen collaborates on the drug with Elan Corp.
"The key variable in the take-out price is the outlook for Tysabri," said Geoffrey Porges, an analyst at Sanford Bernstein, who sees Biogen fetching $85 to $100 a share.
Investors are clearly anticipating a keen tussle, with Biogen shares rising 18.8 percent on Nasdaq on Monday to $82.51, valuing the business at around $23 billion.
The prize offered Biogen is a bridgehead into the biological medicines market, where growth is faster and margins higher than in traditional pharmaceuticals.
"A lot of people want biological capacity. Those who have it already probably won't be bidders, so I guess you can probably count out Roche and AstraZeneca," said Ben Yeoh, an industry analyst at Dresdner Kleinwort.
France's Sanofi-Aventis, the world's third-largest drugmaker, said last month it was looking for acquisitions in biotechnology -- particularly in manufacturing.
Pfizer, the global No. 1 in pharmaceuticals, has also trumpeted its determination to be a leader in biotech.
"Sanofi is looking for more biological products and Pfizer is doing the same," said Tim Race of brokerage ING.
There are possible obstacles in place. Biogen has a partnership with Genentech Inc for Rituxan, as well as with Elan for Tysabri. Under a change of ownership Genentech and Elan have the right to buy Biogen's rights to those drugs.
"We believe Genentech has both the motivation and the resources to gain full control over Rituxan," said Bret Holley, an analyst at CIBC World Markets.
"Given that we expect Rituxan to continue to be a major revenue driver for Biogen, we believe the loss of rights to this product would significantly diminish Biogen's value to a potential acquirer."
Biogen's announcement late on Friday comes four years after it was acquired by Idec Pharmaceutical for $6.7 billion.
The company said it hired Goldman Sachs & Co and Merrill Lynch & Co to help find a buyer and that it has already received "expressions of interest."
One interested party is billionaire investor Carl Icahn, who recently took control of ImClone Systems Inc and has increased his stake in Biogen to about 4 percent.
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