Bertarelli close to the wind

Ernesto Bertarelli was centre stage when Alinghi won the America's Cup. Picture / Kenny Rodger

The billionaire Bertarelli family has ended a five-month search for a buyer for Europe's largest biotechnology company because the offers were too low.

The stock of Serono had its biggest drop in more than three years on the news. Chief executive officer Ernesto Bertarelli said the company would now seek acquisitions.

Bertarelli hired Goldman Sachs as adviser in November after Serono abandoned research on three experimental drugs and competition increased for its top medicines. Potential suitors such as GlaxoSmithKline and Novartis have walked away, leaving Serono with few options to revive growth. "I foresee a difficult future," said Joerg de Vriess Hippen, at Allianz DIT Deutscher Investment Trust in Frankfurt. "From an investor's point of view, putting the company up for sale the way it was done was far from ideal."

Media reports last month said Bertarelli, 40, might step down. The billionaire is organising an America's Cup defence and analysts said investors would most probably welcome a CEO with biotechnology experience.

Serono had about US$1.5 billion ($2.4 billion) in cash and cashable assets at the end of last year and shareholders meet on April 25 in Lausanne, Switzerland, to vote on the plan to create new shares valued at about 7.3 billion francs ($2.2 billion).

"We're actively looking at what's on the market and given internal resources, the speed at which we can act and financial flexibility, we'd be able to execute a transaction relatively quickly," Stuart Grant, the company's chief financial officer, said.

"We're not adverse to a single large acquisition, neither are we adverse to multiple smaller transactions."

Grant declined to comment on the price the Bertarellis were seeking for their controlling stake, but said the share capital issue planned would be valid for two years.

The company has been buying products to reduce dependence on the multiple-sclerosis medicine Rebif and the fertility drug Gonal-f, which together generate three-quarters of the company's sales. Product acquisitions have allowed the company to move into new disease areas such as oncology and dermatology.

Serono was founded in 1906 to extract proteins from egg yolk to make anaemia therapies and pioneered infertility treatments in the 1960s.

The company is struggling to go from copying human hormones to developing its own drugs.

Last year it had to pay US$725 million to settle a United States Government probe. It pleaded guilty to conspiracy charges for the promotion of Aids drug Serostim. 

- BLOOMBERG