The top 5 trends in biotech - #3: High val­u­a­tions for at­trac­tive biotechs are a durable symp­tom of a thriv­ing fi­nanc­ing are­na

It’s been in­ter­est­ing watch­ing the var­i­ous big bio­phar­ma play­ers ex­e­cut­ing their M&A strate­gies for 2017. Some, like the ac­quis­i­tive Pfiz­er, have drawn back in hopes that tax re­form al­lows them to repa­tri­ate bil­lions in over­seas ac­counts. Quite a few — take Roche for ex­am­ple — hate the val­u­a­tions on the biotech drugs they are in­ter­est­ed in. Gilead, mean­while, pa­tient­ly wait­ed out re­peat­ed de­mands from an­a­lysts that they do some­thing now(!) and then pounced on Kite, hap­pi­ly pay­ing a mas­sive pre­mi­um for the biotech in or­der to be­come — overnight — a leader in CAR-T.

To me, it’s the ag­gres­sive Gileads of the world — go­ing their own way, un­daunt­ed and undis­tract­ed by is­sues be­yond their con­trol — that have the right strat­e­gy. And while clear­ly risky, the fun­da­men­tal dri­vers be­hind high val­u­a­tions in biotech will keep the pres­sure on more M&A at some jaw-drop­ping sums.

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