Big Pharma - buying their way out of trouble

"I liked the product so much I bought the company! "

So said the late Victor Kiam (pic).

But how much should you pay for a potential product?

"Observers say that some of the largest companies such as AstraZeneca and Pfizer - which last summer paid $1.9bn for the US-based anti-infectives business Vicuron - are not going to let price competition get in the way of a deal if it makes strategic sense.

"The key driver continues to be the pharma industry's need to fill its product pipeline," says Fintan Walton, head of PharmaVentures.

Andrew Fraser from 3i, the venture capital firm, agrees. "Between their sheer size with a need to feed the (pipeline) monster, product failures like Vioxx, and patent expires, there is pressure on some of the big pharmaceutical groups," he says.

He helped oversee recent deals including the sale of KuDos, with an early stage oncology platform, to AstraZeneca for $210m. "A lot of late-stage compounds have been picked over already," he says. "Early stage deals are growing."

Continued large cashflows from the sales of existing blockbuster drugs, and big repatriated tax credits in the US, have provided additional resources to match the current pressure for new deals."

From the FT .