Major Revenue Losses From Patent Expirations Forces Big Pharma Companies to Look to the Biotech Industry for Replacements

NEW YORK, NY--(Marketwire - Jan 15, 2013) - Lost revenues from expiring patents has played a major part in the Biotech Industry's success in recent years. A total of 676 takeovers of biotechnology and pharmaceutical companies have occurred in the past three years, with an average premium of 38 percent, according to data collected by Bloomberg. Five Star Equities examines the outlook for companies in the Biotech Industry and provides equity research on Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) and VIVUS, Inc. (NASDAQ: VVUS).

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At the end of the third quarter five of the biggest drug makers in the U.S. held over $70 billion in cash, near cash and short-term investments. Major revenue losses from patent expirations have forced big pharmaceutical companies to look to biotech companies to help fill the void. Pfizer's Lipitor and Bristol-Myers' Plavix, which lost exclusivity in late 2011, had combined annuals revenues of $17 billion at their peaks.

"We're through many cost-cutting programs, restructurings and portfolio arrangements," said Henry Gosebruch, Managing Director, Mergers & Acquisitions J.P. Morgan. "When you put that together with record levels of cash available and improving, but still moderate R&D productivity, we think there will be more big pharma M&A activity in 2013."

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Arena Pharmaceuticals is focused on discovering, developing and commercializing novel drugs for weight management, cardiovascular disease, inflammation and other disorders. The company is currently seeking partners to help market their weight-loss drug Belviq in Europe and China. "Europe is not partnered yet -- we're waiting for approval," Jack Lief, Arena's President and CEO, said at a recent health-care conference. "We're talking to partners presently, even at this meeting."

VIVUS is developing innovative, next-generation therapies to address unmet needs in obesity, diabetes, sleep apnea and sexual health. The company recently reported that prescription shipments for Qsymia, their anti-obesity drug, totaled 12,978 for the four weeks ended Dec. 21, a monthly increase of 67 percent.

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