GO
Loading...

Who's Next After Genentech?

Monday, 21 Jul 2008 | 7:06 PM ET

The Roche buyout of Genetech has Cramer wondering who the next biotech takeover target will be.

Cramer on Biotech
An outlook on the biotech sector, with Mad Money host Jim Cramer.

Roche took advantage of the weak dollar to pick up DNA , much in the same way InBev bought Anheuser-Busch, and Carmer’s expecting that trend to continue. But there’s another reason biotech works right now: these names tend to outperform during a banks-led slowdown. That’s how it worked in 1990, and that’s how it’s playing out now.

So who’s the attractive name out there right now? Cramer said he likes Watson. Normally, he’d stay away from a company with so many generic products – 150 versus 27 branded – but it’s Watson’s pipeline that has Cramer’s attention.

Watson has 60 abbreviated new drug applications pending at the Food and Drug Administration. The pipeline’s worth $2 billion. Not bad for a company with a market cap of $3 billion.

Watson’s founder, chairman and CEO announced his retirement last year, and that’s usually a sign, Cramer said, of an impending takeover.

Wait for a bit more weakness in the share price if you’re going to buy. WPI is only $4 below its 52-week high. You might not have to wait too long, though. Merck’s continuing Vytorin problems might offer you just the entry point you need.



Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the Mad Money website? madcap@cnbc.com

  Price   Change %Change
ABI
---
ACT
---

Contact Mad Money

  • Showtimes

    Monday - Friday 6p ET
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.