Place Your Bets

A big deal, but a safe bet. That's one way to characterize Roche's bid to acquire Genentech. Even with the hefty price tag—and putting company culture aside—the move to lock up Genentech's powerful portfolio of oncology drugs makes a lot of sense. It's part of a growing trend that some industry watchers have characterized as a safer, more cautious approach to deal-making. It's not that companies aren't willing to shell out the cash (they have the balance sheets to do it), they just want to make sure they don't get burned.

"You see Big Pharma becoming more risk averse," says Robert Esposito, partner in KPMG's pharmaceutical transaction services. "They're incredibly disciplined right now because none of the big companies want to be known for entering into a transaction they can't justify to their shareholders, their board, or Wall Street."

Of course, that caution hasn't stunted deal-making—in fact, the weak dollar points to a growing pool of potential acquirers and more deals in the year to come. But pharmas aren't seeking any ol' deal—they're looking for the next "it" drug, and careful scouting has placed a premium on an elite set of companies with promising late-stage products. "It's a little bit like musical chairs," says Steven Burrill, CEO of Burrill & Company. "There's a limited set of opportunities, and everybody's scrambling to grab what they can."