23 Mar No money, no buyers for struggling biotech firms
Times are tough in the biotechnology sector. So tough that some companies are looking for ways out.
The problem is, the most feasible way to do so is to find a buyer, and few companies large enough to make acquisitions are willing to shell out that kind of cash these days. Raising money by entering the public markets is increasingly difficult for companies in all areas of the technology industry.
“A lot of companies have put themselves up for auction in the last six to nine months, but they’ve failed,” said Gordon “Rusty” Johnson, managing director of Piper Jaffray and Co. “There are many mid-sized and small companies that are struggling and are, in some cases, in desperate straits.”
Johnson was among the biotech executives, investors and bankers who attended an event put on by the Technology Council of Maryland’s MdBio division last week in Rockville.
Big pharmaceutical companies such as Pfizer, GlaxoSmithKline and Merck are the traditional buyers of firms specializing in drug development and other medical products. But many are distracted by their own cash-flow problems, he said. He estimated that at least 100 small biotech firms across the country have enough cash to continue operating for only one year, so many are looking to consolidate.
Some industry followers say firms should still keep their eyes out for potential buyers. As companies of all sizes cut back on funding for research and development, smaller firms with robust research arms will be attractive to acquirers of all sizes, said Bruce Robertson, life sciences investor for H.I.G. Ventures.
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