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M&A: Four Health Care Stocks in Play (AMLN, FRX, STJ, EW)

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As positive economic indicators have powered the market towards its highest level in four years, M&A speculation has heated up in the pharmaceutical space. Major drugmakers continuously search for ways to bolster their pipelines and takeovers have remained an attractive alternative. Here are four names that could be acquired in the not too distant future.

Forced Hand

After Carl Icahn turned up the heat on Amylin Pharmaceuticals (Nasdaq: AMLN) it became apparent that this company will ultimately have to sell itself. Amylin spurned an unsolicited offer from Bristol-Myers Squibb (NYSE: BMY) in late March. Its days as a standalone biopharma company are likely numbered however. 

A lawsuit by Icahn likely helped bring the company to the realization that a sale will be inevitable. It has since been reported by a number of media outlets that Amylin has called upon Credit Suisse and Goldman Sachs to help it seek out additional offers. The company’s stock price has seen an impressive run-up as takeover talks have heated up. Shares of Amylin have soared 122.7% since the beginning of the year.

Another drugmaker that may soon find itself to be the subject of an increasing number of takeover rumors is Forest Laboratories (NYSE: FRX). The company has been mentioned as a potential target for AstraZeneca (NYSE: AZN) as AstraZeneca begins its search for a new CEO. Forest has five drug candidates in phase 3 trials and two that are awaiting decision on new drug applications.

Honorable Mentions

With Johnson & Johnson (NYSE: JNJ) looking to build out its medical device unit, St. Jude Medical (NYSE: STJ) has become an attractive acquisition candidate. St. Jude is a significant player in the implantable cardioverter defibrillator (ICD) and pacemaker arenas.

In Q1, St. Jude posted ICD sales of $450 million or a 3% decrease when compared with the prior year quarter. The company reported pacemaker sales of $285 million which represented a 4% declined on a year-over-year basis. Shares of St. Jude are up 13.2% year-to-date.

One other company that has been mentioned as a potential takeover target of JNJ is Edwards Lifesciences (NYSE: EW). Last year, the company won FDA approval for a heart valve device designed for patients who are unable to undergo a chest-opening procedure. Shares of EW have surged 22.0% so far this year.

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