BioWorld International Correspondent
LONDON - The defining event that will force through the consolidation of the UK biotechnology sector may have arrived with the announcement that Peter Fellner, outgoing CEO of the UK's largest biotech company, Celltech Group plc, will become chairman of British Biotech plc, with a brief to look for merger and acquisition opportunities.
Commenting on his appointment, Fellner said, "There is currently a significant opportunity to create value within the biotechnology sector, through the consolidation of companies with good R&D and/or pipeline products, which are hampered by high cost bases and inadequate financial resources."
He added that with £42.8 million (US$67.6 million) cash, British Biotech, based in Oxford, has a strong balance sheet on which to build. "I very much look forward to helping create value for the company's shareholders."
British Biotech CEO Elliot Goldstein resigned last month after failing to agree to a merger with MorphoSys AG, of Munich, Germany. That capped a fruitless 18-month hunt for M&A partners.
As CEO of Celltech since 1990, Fellner has overseen the acquisition of Chiroscience plc and Medeva plc. It was announced earlier this year that he was to resign, and he will take up the post at British Biotech as soon as his successor is appointed at Celltech. He will remain as chairman of Celltech, based in Slough.
Emma Palmer, analyst at WestLB Panmure, said Fellner's consolidation experience at Celltech and his strong pharma/biotech links will facilitate the M&A process. "Following the departure of Elliot Goldstein, the company has only an acting CEO and so we do not expect management issues to be a barrier. [British Biotech's] focus on consolidation is emphasized by the fact that a search for a new CEO is not yet ongoing - it believes that this issue can be sorted out after a deal."
British Biotech shares rose 1.2 percent last week to close at 4.25 pence on Friday. That gives the company a market capitalization of £28.6 million, a considerable discount to the cash reserve.