Rumors of a takeover have surrounded biotech company Biogen for more than a year now, but whether it will be the buyer or the bait is the big question.
A Wall Street Journal report, however, stoked speculations that it is an acquisition target and that two drugmakers, namely Dublin-based Allergan PLC and New Jersey-based Merck & Co., are each vying for the company.
Boosting Drug Portfolios
The two prospective buyers are significantly larger than Biogen: Allergan's market value is $101 billion while Merck is worth $162 billion. The unnamed sources did point out that talks may not necessarily result in a solid agreement with Biogen, but the rumors do prove the viability of the biotech company as a profit source for big pharmaceutical companies.
Given the fact that Biogen, which is worth $68 billion, is recognized as the leading maker of multiple sclerosis (MS) medicines, makes the biotech company an attractive purchase for other drugmakers seeking to boost their portfolio of drugs.
Merck is committed to developing treatments for Alzheimer's. Allergan, on the other hand, is the maker of Namenda, a popular drug for the same disease. All three companies are thus looking into building up their pipeline of drugs to be able to sustain growth.
Questions On Growth
After the WSJ published the report on a possible takeover, Biogen shares closed at $330.11, up 9.4 percent, but this figure is a far cry from a high of $500 per share that the biotech company reached last year. Questions have surrounded its growth strategies. In the third quarter of 2015, sales of its flagship MS drug Tecfidera remained flat. It was, however, able to close 2015 with sales of $10.8 billion, registering an 11 percent increase.
The WSJ notes Biogen rivals, for instance, also want to tap into the almost $20 billion market for MS medicines.
While officials of the companies have yet to issue a statement on the takeover possibilities, Biogen is said to be gearing up for a new leadership as CEO George Scangos steps down in early 2017. Hiring a new CEO would signal that Biogen is not interested in any acquisition proposal and would rather maintain its independence.
Should Biogen become a takeover target in the end, the group could rake in $400 per share, says Michael Yee, a biotech analyst for RBC Capital Markets.
Allergan's Takeover Prospects
If word of Allergan's proposal to acquire Biogen turns out to be true, the move would be a followup to its failed $160 billion merger with Pfizer. In April, Tech Times reported that the deal was scrapped after the Internal Revenue Service (IRS) and the Treasury Department issued new rules that targeted so-called tax inversions.
The Allergan-Pfizer deal would have seen Pfizer moving its headquarters to Ireland and its taxable earnings being lowered.
