BMY

The WSJ deal blog has discussed circulating rumors in regards to Sanofi Aventis (SA) making potential acquisitions, and including Bristol Meyes (BMY), Allergan (AGN), and Amgen (AMGN) in the mix of contenders. In regards to Allergan and Amgen in particular, now might be one of the cheaper times to pick them up, as per BNET Pharma, given their current near-term difficulties. Allergan is facing reduced demand for its vanity-based products such as Botox while Amgen is awaiting a hopeful approval for cancer Denosumab (October 19th, 2009) as a lone near-term savior for its maturing drug portfolio. For Sanofi it is a bit tricky, if indeed AMGN is on the radar, since if they wait for the Denosumab results, they could see AMGN shares become much more expensive. But of course if they buy ahead, then the results could be negative. This is the dilemma facing all AMGN investors right now.

But even if Denosumab doesn't pan out, I actually believe fears regarding AMGN's maturing portfolio are overdone. For biologics (biotech drugs), the generics threat will be no where near what it is for standard pharmaceuticals. It's just too hard to replicate biologics, thus requires sizeable up-front investment and manufacturing know-how, as was the result of the FTC's excellent report on the biotech industry. Highlights of this report below. (FOB's are the generic producers, pioneers are the originals like AMGN)