According to a survey conducted by analyst Asthika Goonewardene for Bloomberg Intelligence, Biogen should buy a company that will immediately boost its revenue, reported Bloomberg.
"Investors think Biogen's top priority should be to acquire an asset that will have meaningful top-line growth within the next 18 to 36 months," Goonewardene said, "so, not one of those really small biotech companies that will only deliver something very promising five to seven years down the line."
Biogen may be able to stretch its balance sheet by borrowing as much as $22.5 billion and still keep an investment-grade credit rating, according to an analysis by Goonewardene and Bloomberg Intelligence's Amanda Lynam.
They estimate Biogen could seek deals up to $75 billion, assuming 30 percent of the payment were cash and the rest were stock. This suggests Vertex Pharmaceuticals, valued at $31 billion, as well as $42-billion Alexion Pharmaceuticals, may be within Biogen's reach, the news source said.
Brian Skorney, an analyst for Robert W. Baird & Co., pointed to Neurocrine Biosciences and Acorda Therapeutics as two companies that may make sense for Biogen. Neurocrine is valued at $4.3 billion, versus Acorda's $1.5 billion, while both focus on neurological conditions.
However, Skorney cautions that industry takeover valuations are climbing to a point where some people see a bubble forming, indicating a risk that some acquirers are overpaying for deals.