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Jul.21
7:06 PM ET

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

Roche took advantage of the weak dollar to pick up DNA [DNA  Loading...      ()   ], much in the same way InBev bought Anheuser-Busch [BUD  Loading...      ()   ], 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 [WPI  Loading...      ()   ]. 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.



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