The buyer in a new merger in the pharmaceuticals industry is betting that growing demand for hepatitis C treatments will provide a big payoff in the coming years, according to news reports.

California-based Gilead Sciences Inc. this week agreed to acquire drug developer Pharmasset Inc at a cost of almost $11 billion. San Diego mergers and acquisitions lawyers noted from news reports that the large merger will have a considerable impact on the company's perceived value as well as its impressive portfolio of medicinal treatments.

Gilead is highly regarded for its landmark treatments developed to combat HIV.

The merger is an enormous boon to Pharmasset stockholders, who will enjoy a hefty 89 percent premium for each share of stock. At a buyout price of $137 per share, Pharmasset investors struck big on a stock that had traded below $10 as recently as last year.

Pharmasset is a relatively small company with only 80 employees, and it currently has no products on the market. Still, the company's potential to strike it rich on hepatitis C treatments was too enticing for Gilead to pass up.

The merger broadens Gilead's treatment development reputation and will help the company establish itself as one of the foremost world leaders in pharmaceutical treatment development. Because of this, the merger could produce additional dividends as it raises Gilead's profile in the pharmaceutical treatment market. The merger also makes clear the potentially lucrative payouts smaller companies are eligible to receive if their product development teams can engineer pharmaceutical treatments for infections and other conditions.

Source: WSJ "Gilead Makes $11 Billion Bet on Drug Developer Pharmasset" Nov. 21, 2011