The 27th J.P. Morgan healthcare conference kicks off Monday morning in San Francisco, one of the industry's top dealmaking venues of the year centered in and, for the multitude of parties and meetings, around the city's storied St. Francis hotel (pictured).
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For most of the hundreds of public and thousands of private drug and device companies, the quest for financing will be paramount. The first half of 2009 could see an unprecedented wave of consolidation and, for those who don't find cash or partners, the end of the line. Biotech banker Steven Burrill predicts the number of public companies will drop from about 370 to 250 this year.
Initial public offerings are one type of deal not on the table. There was one drug-related debut last year in March, and two device-related offerings, perhaps the worst IPO year ever for biotech. No venture-funded firm should count on IPO as a financing option in 2009, which leaves M&A and partnerships. There were a flurry of the latter in December, with Pfizer Inc., GlaxoSmithKline plc, Genzyme Corp. and many others all making big up-front bets on other companies' R&D.
Perhaps the most closely watched development at the conference is the pending Roche Holding AG takeout of Genentech Inc. Roche offered $43.7 billion last summer for the 44% of Genentech it doesn't already own. Genentech said it was too low, and a stalemate has held ever since, thanks in large part reportedly to the credit markets. Monday morning Roche shot down a news
report from Friday that it would forgo its shareholder dividend to bolster its cash for a renewed run at Genentech. Roche makes its public presentation later Monday. Genentech CEO Art Levinson takes his turn at the podium Tuesday after the markets close.
Smaller deals will flow, though, as a handful of well-capitalized companies take advantage of the downturn, like shoppers hitting the post-Christmas sales on Fifth Avenue. Monday morning comes news of two such deals. Abbott Laboratories is spending nearly $1.4 billion for an eye-care company, and device giant Medtronic Inc. will pay $225 million plus milestones for a private California firm that makes catheters to treat irregular heartbeat. -
Alex Lash
