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Opinion
Chris Hughes

A Reckoning Is Coming for Cash-Strapped Biotechs

Pharma bosses suggest biotech bid targets are unrealistic. Buyers can afford to talk tough: They have the upper hand.

Not every biotech is a Moderna.

Not every biotech is a Moderna.

Photographer: Brent Lewin/Bloomberg

The biotech sector is more than 40% down from its high last February, while the major pharmaceutical firms are flush with cash. That sounds like the ideal condition for dealmaking. But what if biotech boards and shareholders want takeover bids at yesterday’s sky-high prices?

A 2020 study by JP Morgan Chase & Co. analysts found that when markets fall, a takeover target’s one-year share-price high is a stubborn benchmark for pricing a deal. So it can take more than a year from a market correction until buyers and sellers align. Those dynamics may now be at work.