Ultra-Orphan Drug Specialists Represent Poor Value for Money as M&A Targets

High Profiles of Biotechs Specializing in Rare Diseases Has Pushed Up the Price Per Dollar of Future Sales Above Those in Other Fields, According to Findings from Decision Resources

Nov 13, 2013, 09:00 ET from Decision Resources

BURLINGTON, Mass., Nov. 13, 2013 /PRNewswire/ -- Decision Resources, one of the world's leading research and advisory firms focusing on pharmaceutical and healthcare issues, finds that ultra-orphan drug specialists are among the lowest value for money for pharmaceutical companies seeking to boost their top-line sales via M&A. The Strategic Insights report entitled How to Spend it: Buy-out Targets Every Pharma Company Should Consider  finds that only one biotech specializing in orphan drugs is expected to garner 2019 sales that strongly support its multi-billion dollar purchase price. 

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Decision Resources valuation methodology, which—in the context of the target market—takes into account price versus projected sales, finds that there is better value in small diversified companies or for companies with pipeline drugs that are being lined up to slot into the future therapeutic landscape of an indication.

"Drugs for rare diseases have huge sales potential, carry premium prices and have minimal competition," said Decision Resources Senior Analyst Lisa Murch. "However, these benefits are obvious to investors, and the share prices for companies with strong candidates in the pipeline are sky high. This leaves no room to account for the still-considerable risk of R&D, not to mention the possibility of pressure on these very high drug prices."

About Decision Resources
Decision Resources (www.decisionresources.com) is a world leader in market research publications, advisory services and consulting designed to help clients shape strategy, allocate resources and master their chosen markets. Decision Resources is a Decision Resources Group company.

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SOURCE Decision Resources