Drug innovator bought
AstraZeneca, one of the top ten pharmaceutical companies in the world, announced it would buy US drug company MedImmune. The price for the deal is $15 billion, that is, three times the amount being offered to take Chrysler off Daimler's hands. That says a lot about the profit opportunity in the drug industry, where even a little-known company can command such a big price.
AstraZeneca, the result of a 1999 merger UK-based Zeneca PLC and Sweden-based Astra AB, Swedish firm. Its top drugs include acid reflux remedy Nexium, cholesterol lowering drug Crestor, and drugs for cancer treatment including Nolvadex, Zoladex, and Iressa. The company, which has had relatively few acquisitions compared to other big pharmaceutical companies, last year bought up UK medical research firm Cambridge Antibody Technology for $1.3 billion.
MedImmune, a biotech company, sells a number of drugs, including FLUMist, a vaccine that is applied by misting in the nose, and Synagis, a respiratory drug. A Financial Times article ("AstraZeneca pays $15.6bn for US biotech group", 4/23/07) says that the company's offering fit well with "AstraZeneca's existing expertise in oncology, infection and respiration and inflammation".
The move gets AstraZeneca into the suddenly desirable vaccines market. And of course, one of the big motivators is the inability of big drug companies to innovate. As the Financial Times article notes, "The deal addresses a concern that AstraZeneca's drugs pipeline had been weakened by a series of late stage drug trial failures, and that the earnings outlook was duller as a result." The deal, according to the Wall Street Journal ("AstraZeneca Agrees to Buy MedImmune for $15.6 Billion", 4/24/07) "would increase the proportion of biotechnology drugs in its pipeline to 27% from 7%, and enlarge the total pipeline by 45 projects to 163 projects."
That same WSJ article notes that AstraZeneca is buying into one of the few available mid-size drug companies with a lot of drugs in development. "Auctions for companies the size of MedImmune are rare in the health-care world, given that the business is largely divided between a group of giants and much smaller players with just a few drugs under development."
10:11:01 PM 
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