Dealmaking for the Revolution

If there was one lesson from the bi-polar year of dealmaking in 2000 it was that dealmaking leverage lies with those with the power to either keep and profit from the status quo or remake it. Investors' understanding of Big Pharma's growth troubles encouraged near bio-hysteria among investors for genomics start-ups-but the interest had little staying power, particularly given the relative paucity of drug company discovery alliances. Much better performances came from smaller companies with later-stage products, in-licensing prices for which have now reached almost unsupportable levels. Diagnostics start-ups have likewise been hot as investors recognize that the nearest-term potential of genomics and proteomics technologies lies in disease markers as well as markers for drug function. But medical device dealmaking has been quiet. Start-ups have by and large been unable to show significant growth or the ability to substantially reshape medical device segments--leading to both quiescent acquisition markets and apathetic investors.