On the heels of BMS acquisition of a Phase 1 hepatitis C therapy through its $2.5 B acquisition of Inhibitex, some industry naysayers question whether the risk is worth it at such an early stage and such a high price (Gilead's $11 B buy of Pharmasset can also be thrown into the discussion). It looks like the competitive bidding embodied by "auction fever" may be taking over as some company's scramble to fill in their revenue holes.
Analysts note that Pharma in general pays a 44% premium in their takeover efforts with biopharma -- as compared to 26 percent in other industries. That may seem eye popping to some but is nothing compared to the 89% premium that Gilead's purchase represents and BMS upped the bar to a 163% premium for Inhibitex.
Investors and analysts can now hold their breath for several years to see if these deals pay off or not -- there will always be plenty of ammunition available for second guessing if it doesn't work out.
Posted by Bruce Lehr Jan 11th 2012.