Biotech Values

[DewDiligence]

Is the response of Big Pharma to generics not to in-license more but to resize their operations? And to move horizontally - also into generics, diagnostics, [etc]

This was an astute 2007 post on your part. Certain Big Pharma—most notably GSK and SNY—have done exactly what you posited, moving aggressively into emerging markets where the emphasis is on unpatented “branded generics.” PFE has moved in this direction to a lesser degree. Meanwhile, NVS and ABT, who were already far from “pure” pharma companies a few years ago, have used large acquisitions to diversify even further away from branded prescription drugs (NVS with the Alcon deal, and ABT with the Guidant and Advanced Medical Optics deals).

This is not to say that Big Pharma has given up on biotech in-licensing—far from it. However, I think it’s reasonable to conclude that the recent diversification actions of GSK, SNY, PFE, NVS, and ABT have resulted in fewer biotech deals than we would otherwise have seen.