Alright, Already! 8-4-08: My Predictions


Last year one of our producers had the bright idea of assigning each of CNBC's beat reporters a story about seven predictions for their beat for 2007. So, now this year not only do we have to do the 8 for '08 thing for TV, but also for the blog.

And now that I see my ultra-competitive colleagues have already posted their "predictions" the pressure is on from them and blog editor, Mark Koba. I'm just wondering when it's gonna stop because I'm hard-pressed enough to brainstorm eight ideas and dreading 9 for '09, 10 for 2010, 11 for '11 and on and on and on. OK, so here goes.

1. Mergers, acquisitions, and partnerships, "Oh, My!" They won't let up in biopharma-land. Pharma needs biotech's products and intellectual property. Biotech needs pharma's money. You can probably throw a dart at a board with pharma names and another one with small- and mid-cap biotech names to come up with a list of potential buyers and sellers.

2. Big pharma and big pharma megamerger or acquisition. It could happen. Most of the majors are loaded with dough and/or have the ability to borrow a lot of cash. Analysts still say there are too many "meals on heels" on the streets (referring to the stereotypical attractive, female drug sales reps catering for doctors' staffs). With a lot of the big drug companies facing patent expirations on blockbuster products, little--if anything--in their pipelines to take their place, etc. I wouldn't be surprised to see a pharma-pharma deal.

3. Big pharma and big biotech do a deal. It, too, could happen. Biogen Idec just took itself off the market, but we had Deutsche Bank's Barbara Ryan on last week when once again she said it'd make sense for Pfizer to buy Amgen. Even though the market cap of the biotech giant has fallen to $55 billion, it would still be a huge deal. When I asked Merck Chairman and CEO Dick Clark about the "cheap" value of AMGN yesterday, he would only say, "I think it is important…that we aggressively look at biotech companies."

4. One, maybe two new drug-coated stent competitors enter the American market. Not going out on a limb here. The FDA might even approve Medtronic's device by the end of this year. And Abbott shouldn't be far behind. So, that'd turn the current duopoly of Johnson & Johnson and Boston Scientific into a four-way race. Look for the competition to ratchet up and prices to fall. Drug-coated stents are the pricey little wire mesh tubes that prop open clogged arteries.

5. Pharma stocks could remain under pressure. Pfizer's one of the "Dogs of the Dow" this year. Merck is in a race with McDonald's to be the index's best performing stock. But the sector as a whole has underperformed. With the election looming investors are already bracing themselves for a Democratic-controlled Washington. And historically that hasn't been good for the industry.

6. Dendreon and Provenge. Had to throw that in here because I know it'll generate pageviews and because it will be high interest for biotech investors once again in 2008. Around mid-year is when the company says it'll have what's called the interim results of a major study of its prostate cancer drug, Provenge. And if the sneak peek data show that men on the drug lived significantly longer than those who didn't get it, then Dendreon says the FDA has agreed to possibly approve Provenge. Otherwise, the study continues and patients and investors will have to wait another year or two for the final results.

7. The FDA makes a decision on whether to approve Genentech's Avastin for breast cancer. It's scheduled to happen before the end of February. An FDA panel recently recommended the agency reject the drug for advanced breast cancer that has spread over some side effect issues and the lack of survival data. This ruling could be a bellweather for Dr. Andrew von Eschenbach's FDA. He's an oncologist and a cancer survivor. The agency insists it makes decisions based solely on the science. For me, this one's too tough to call, but it's gonna be very interesting to watch. If Genentech wins, some analysts think it could eventually add more than $1 billion in annual Avastin revenue. So, it's a big deal in many more ways than one.

8. I finally get to do an interview with the outspoken and opinionated Genentech CEO Art Levinson. A guy can dream, can't he?

Disclaimer: I'm not an analyst. I'm a reporter. And these are just predictions. Caveat emptor. And best wishes in the new year. Done.

Questions? Comments?