Idec, Biogen to Merge In $6.8 Billion Deal; 3rd-Largest Biotech Firm Likely to Result
Idec Pharmaceuticals Corp. and Biogen Inc. announced yesterday that they would merge in a $6.8 billion deal that will create a powerhouse in the biotechnology industry, with the new company earning profits from two of the biggest biotech drugs on the market.</br></br>It's the second-biggest biotech merger ever, after Amgen Inc.'s $10.8 billion acquisition of Immunex Corp. in 2002.</br></br>To some degree, the deal reflects the extraordinary dependence of even the largest biotech companies on a handful of products. Stock valuations of both Biogen and Idec were driven by a single blockbuster drug for each company, and sales growth for those drugs had leveled off recently. The companies had no immediate prospects for delivering the earnings growth that Wall Street is demanding of top-tier biotech companies.</br></br>"Neither company has a great pipeline," said John McCamant, editor of the Medical Technology Stock Letter in Berkeley, Calif., using the industry term for a portfolio of experimental drugs. "Both companies see an opportunity to leapfrog some of the competition and become the clear No. 3 biotech."</br></br>The companies' managements emphasized, however, that the long- range future of their combined organization will be bright. The merged company will have strengths in some of the hottest areas in medicine these days, with particular focus on cancer treatment and on the many serious diseases that involve overactivation of the immune system.