The Biotech Investment Act
The Homeland Investment Act will allow Big Pharma to bring into the US a huge horde of foreign earnings at very attractive tax rates. Given the pipeline drought, some of that money is going to go to biotechs.
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Domain partner Eckard Weber has become a master of the one-two punch in venture investing. The process (now in its third iteration following Merck's $350 million acquisition of NovaCardia): find a drug no one cares about; create a low-infrastructure company around it; find a second drug; sell off the lead drug through an acquisition; develop the second drug a bit more with the same management; then sell that one too. The first deal at a minimum pays back the investors; the second deal juices the returns. It's a model many VCs want to follow.
The higher the cost of late-stage alliances, the likelier acquisitions are. And that's just what our statistical view of significant acquisitions is showing--the number of $100mm-plus biotech acquisitions has increased dramatically over the last half-decade, including an increasing percentage from Big Pharma.
Does the recent flurry of acquisitions of private biotech companies by pharma companies represent a new and continuing trend? Yes--and a real change in thinking at Big Pharma and among VCs.