1. In Vivo
  2. >>Business Strategy

Are Share Buybacks a Wise Investment for Biopharma

Biogen Idec, Genzyme and Amgen have eached announced large share buybacks recently. Wall street smiles on these buybacks and the conventional wisdom suggests they are a tax-efficient way of returning cash to shareholders. But in biopharmaceuticals, there is a downside to these shareholder sweeteners.

Biotech companies often argue that the market undervalues them. And sometimes they have a point—particularly if you pay attention to the robust acquisition scene, where it isn’t unusual to expect 50-70% premiums tacked on to market value. (See "Reviewing Five Years of Big Pharma’s Biotech Acquisitions," IN VIVO, May 2007 Also see "Reviewing Five Years of Big Pharma's Biotech Acquisitions" - In Vivo, 1 May, 2007..) Even big biotechs and pharmaceutical companies are increasingly valued based solely on their marketed products, with a smidgen thrown in to account for late-stage pipeline products (but only a smidgen).

One basic theory put forth to explain the biotech valuation gap suggests that Big Pharma, flush with cash but relatively...

Read the full article – start your free trial today!

Join thousands of industry professionals who rely on In Vivo for daily insights

  • Start your 7-day free trial
  • Explore trusted news, analysis, and insights
  • Access comprehensive global coverage
  • Enjoy instant access – no credit card required
Start Free Trial

Already a subscriber?

More from Business Strategy

Late-Stage GLP-1 Drug Trials Outside The Cardiometabolic Space

 
• By David Wild

A look at Novo Nordisk, Eli Lilly and other companies' late-stage clinical studies of GLP-1 drugs in indications ranging from neurodegeneration to oncology, and alcoholic liver disease to autoimmune conditions.

Rising Leaders 2025: Metsera’s Whit Bernard’s Musical Path To Biotech Leadership

 
• By David Wild

Metsera CEO Whit Bernard applies an unconventional leadership philosophy to develop next-generation obesity therapeutics, including monthly GLP-1 injections and oral peptides.

AI In Drug Discovery: The Patent Implications

 
• By David Wild

A Q&A with DeAnn Smith, partner and co-chair of the Patent Trial and Appeal Board Proceedings Practice Group at law firm Foley Hoag.

Is Advanced AI Revolutionizing Sales Enablement In Pharma?

 
• By Marina Hickson

Advanced AI is revolutionizing sales enablement by addressing training gaps and performance challenges. Used correctly, it can help to bridge the sales-marketing divide, accelerate ramp-up times and provide managers with data-driven insights.

More from In Vivo

Behind The Buyout: Dispatches From The Dealmaking Table

 
• By Jo Shorthouse

In a challenging funding environment for biopharma, strategic dealmaking has become a critical growth engine. In Vivo explores what it truly takes to navigate high-stakes acquisitions and partnerships, drawing on insights from seasoned industry leaders.

Crisis Or Opportunity? US MFN Policy Could Test Japan’s Appetite For Reforms

 
• By Lisa Takagi

While the adoption of most favored nation drug pricing in the US stands to affect Japanese biopharma firms now heavily reliant on this market, it might also present an opportunity for pricing and policy reforms at home.

Rising Leaders 2025: Ovid’s Meg Alexander On Neurology’s Next Frontier

 
• By Jo Shorthouse

Ovid Therapeutics' president and COO Meg Alexander is leading the company’s strategic pivot toward innovative neurological treatments, potentially creating a new class of medicines for rare neurological disorders.