"The drug industry has become a victim of its own success," says Kevin Lewis, an equities analyst for pharmaceutical and biotech with William Blair & Co., Chicago. "Just five years ago, companies like Merck and Pfizer were relying on their own internal R&D to develop new products. But now, with the advent of billion-dollar-plus drugs, it's such a hard act to follow that the companies are looking outward [to keep their pipelines open]. Growth is coming from partnering with other pharmaceutical companies and copromoting their drugs. That's good for biotech because it's on the cutting edge of science, and working in areas that Big Pharma has shunned. The genomics companies are good examples. Big Pharma is knocking on the doors of everybody in genomics to find new stuff."
Historically, mergers have been less profitable than executives originally anticipated. "Benefits [such as cost cutting and eliminating duplicative operations] have been in ...
