In follow up to its interview with Kevin Kinsella earlier this month, that detailed Big Pharma's increasingly bad behavior toward biotech's during deal making, Xconomy's Luke Timmerman concludes that Big Pharma won't be able to extinguish biotech but may lose a few of its own members should this approach persist.
The thrust of the Kinsella interview was that Big Pharma was foisting bad deals on a desperate biotech during a down time for financing options - since IPOs are all but dead. That leaves Big Pharma in the driver seat to offer predatory deals - that Kinsella charges include bad faith negotiating, low ball pricing with all money on back end and no compensation to VCs for upfront risk.
Timmerman opines that he'd like to see the bullies get "their come-uppance" when the economy turns and that companies that had to endure bad behavior in down times will be able to ignore these same suitors in richer environs - for a what goes around comes around finish. The large company may then be on the hook with not being able to replenish its pipeline and become a takeover atarget itself.
Fierce Biotech reported on a couple more trends that may also need to be taken into account by these bigger bad actors. Namely, more mid-size biotechs are entering the M&A waters themsleves looking to bolster their own pipelines similar to Big Pharma, and the Japanese pharma groups have started to become more active. In fact, Japanese groups have completed 34 deals in the past 12 months - for example Daiichi Sankyo just acquired Plexxikon today.
Posted by Bruce Lehr March 2nd 2011.