M&A is poised to pick up this year among biotechnology companies, as health care uncertainty and the austerity measures of the past couple of years near an end, and large companies look to invest in increased synergy and product pipelines, says Piper Jaffray & Co. Managing Director Ian Somaiya.
“There are always two themes that occur in biotech; which companies offer the greatest synergy — easy cost-cutting measures, whether it’s value in the pipeline, which no one else realizes or is paying for today — and then just the major product opportunities, which you just need to pay up for,” Somaiya said.
Somaiya says BioMarin Pharmaceutical (BMRN) is a company with blockbuster drug potential for its Morquio syndrome treatment, and it would benefit from the synergistic opportunities of partnering with a larger company looking to expand its product pipeline.
“I think a larger entity could take advantage of the natural early stage development capabilities of BioMarin,” Somaiya said. “I would envision it generating sales in excess of a $1 billion versus its current portfolio of drugs, which at peak will generate sales of $300 million, maybe $400 million at best.”