Health care's dealmaking couple is back

Frank and Tanner, the first family of pharma finance, are together again in time for the industry's wave of consolidation.

By Alyssa Abkowitz, reporter

NEW YORK (Fortune) -- The husband-and-wife team that built the first franchise to advise clients on health-care deals is reuniting. Frederick Frank and Mary Tanner joined Peter J. Solomon Co. this week to launch a new pharmaceutical and life sciences practice, just in time for the current wave of deal making that's sweeping Big Pharma.

"We're so happy to be working together again," Frank says. "This was an ideal opportunity to once again build a practice together."

The couple reunites at a rapidly changing time in the health-care industry. Big Pharma wrestles with patent expirations and a dearth of new products in its pipelines while small biotech companies can't raise capital nor take the traditional IPO route. Frank says Big Pharma has 96% of the industry's cash and spends 92% of the industry's R&D dollars even though smaller firms unveil 67% of the products.

"The Pharma giants are good at development, good at marketing and good at manufacturing but they're not really good at research," he says. "With the little guys it's just the opposite. We think we can be a great facilitator in the strategy of these various two parties."

Frank and Tanner, who started their careers at Lehman Brothers, worked together for more than a decade before Tanner took time off to have their son. Frank remained at Lehman Brothers and most recently held the position of vice chairman of Barclays Capital. When Tanner returned to the workforce, she served as senior managing director at Bear Stearns.

The power couple has hundreds of transactions under their belts. In early 1980s the duo helped usher in the $120 million initial public offering of bioengineering firm Cetus, a transaction that still ranks as one of the largest U.S. IPOs ever completed. In 1996, Frank took CV Therapeutics public and this month finished advising the biotech in its $1.4 billion sale to Gilead Sciences.

In the past few years, Frank and Tanner have completed a number of mergers between Big Pharma and early-stage biotechs that gave investors anywhere from four to 10 times the return on their money.

Their new practice also serves as a kind of Lehman Brothers reunion because the couple joins their friend and former Lehman colleague Peter Solomon.

Their biggest challenge now, Frank and Tanner say, will be to think globally. That's where growth and ideas are, but it also presents the challenge of navigating mazes of foreign regulation.

As for what's next in the industry, the duo says we'll see more mergers along the lines of CV and Gilead and an increase in personalized medicine. Tanner says the diagnostics aspect of the industry could expand quickly if drugs are registered with a diagnostic test that identifies what type of patient the drug will best serve. "That will help products get registered and make reimbursements easier because drugs will hopefully be more effective for a more specific, identified population," she says. "It's going to add a whole new leg on life sciences and therapeutics."

As for their dinnertime conversations, the couple says shop talk around the table is more interesting now that their 15-year-old son understands part of the business. During one meal he turned to Tanner and asked, "Mom is this stem-cell thing going to be as much of a joke as some of the other stuff you worked on?"

Let's hope not, but the teenager does have an inkling about the nature of the pharma industry: long odds and high stakes. To top of page

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