RespireRx Pharmaceuticals Inc (fka RSPI)

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(from BusinessWeek)

Merger Mania
In the past three years, large pharmaceutical companies have responded by merging, forming alliances, buying biotech companies, litigating against generic competitors, and cutting costs. Recent acquisition activity has been focused on smaller biotech firms with promising R&D profiles. S&P believes these responses could help mitigate some of the effects of generic competition and improve new product pipelines in the next three to five years.

After a relative lull in 2007, merger and acquisition activity increased substantially throughout the pharmaceutical and biotechnology sectors during 2008, partly spurred on by declining stock prices that rendered deals more attractive. The first big deal of the year was Takeda Pharmaceuticals of Japan's purchase of U.S. biotech Millennium Pharmaceuticals for $8.8 billion in May.

Takeda was looking to expand its sales base to help offset the upcoming expiration of its U.S. patents on its popular ulcer treatment Prevacid in 2009, and diabetes drug Actos, in 2011, and chose Millennium for its blood-cancer drug Velcade, which Takeda hopes will eventually achieve blockbuster status. Another big deal was AstraZeneca's (AZN) 2007 acquisition of MedImmune, one of the top 10 biotech companies in the U.S., for $15.6 billion.

The deals underscore the need for big drug companies to expand more aggressively in biotechnology, which is faster growing than pharmaceuticals and also not presently vulnerable to generic competition. Given their strong cash positions, drug giants are also well situated to complete cash acquisitions without having to rely on external debt financing in the present constrained financial marketplace.



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