it's like the manhattan real estate market.

For foreign drug makers looking to expand in the United States, the prospects could hardly look better.

The weak dollar is a boon to those seeking U.S. pharmaceutical assets, and it is particularly beneficial at a time when U.S. drug makers are mired in cost-cutting efforts and drug safety concerns.

"It's like the Manhattan real estate market," said David Webster, president of Webster Consulting Group, which advises pharmaceuticals companies. "What keeps it afloat are the Japanese and Europeans or whoever seems to be making money worldwide and whoever has a strong currency."

Whether or not big acquisitions make sense over the long term is a matter of debate - some argue that at the end of all the integration and cost-cutting, what is left is not worth the price. And even European companies have shied away from megamergers between large drug makers as management and investors question the wisdom of such giant tie-ups.

Even so, big acquisitions are still likely to occur, analysts say.

"What else are they going to do?" said Steve Brozak at WBB Securities. "Buy U.S. Treasuries that will be worth barely more than they are today?"

Webster, of Webster Consulting, agreed.

"I think that for foreign companies U.S. pharma is a more guaranteed income stream than T-bills," he said. "The government would more likely default on T-bills than let the pharmaceutical industry go down the tubes."

the time is right to buy U.S. drug companies

by toni clarke

april 15, 2008