IDEC and Biogen forge biggest bio pairing in 2003

The resurgence of merger and acquisition activity in the biotech industry shows little sign of letting up, with US companies IDEC Pharmaceuticals and Biogen the latest to step up to the altar.

IDEC initiated the process with a stock-for-stock deal that valued Biogen at $44.82 per share, bringing the total of the transaction to more than $6.4 billion.

However, the response of analysts to the deal has been lacklustre, and both companies share prices have been on the slide since the announcement. The fear is that the new entity will lose the entrepreneurial edge that characterises many top biotech companies and will become less innovative as a result.

The merged company will be named Biogen IDEC and focus on the core therapeutic areas of neurology, rheumatology and dermatology, with a growing emphasis on oncology, and autoimmune/inflammatory diseases.

It will boast two blockbuster drugs, in the form of Biogen's multiple sclerosis drug Avonex (interferon beta-1a) and IDEC's MabThera/Rituxan (rituximab) for non-Hodgkin's lymphoma. However, Avonex has come under considerable pressure latterly following the approval of Rebif (interferon beta-1a) a rival product from Switzerland's Serono.

In a statement, the companies said that the new entity will have an R&D spend of over $550 million, and the merger will add to its earnings per share within two or three years of its completion. Pro forma revenues for last year totalled $1.55 billion.