Pfizer and Novartis Could Be Eyeing Onyx (PFE, NVS, ONXX)

Things are starting to heat up in the already hot pharmaceutical sector – especially as it relates to mergers and acquisitions.

Only days after Onyx Pharmaceuticals (NASDAQ: ONXX) said it rejected an $8.7 billion buyout offer from Amgen (NASDAQ: AMGN), according to Reuters, the company has apparently attracted interest from several other large pharmaceutical firms including Pfizer (NYSE: PFE) and Novartis AG (NYSE: NVS).

This news is from two people familiar with the matter who spoke with Reuters Monday.

Related: Onyx Rejects Amgen Bid - But Open to Other Offers

Onyx, a biotech company that specializes in profitable cancer drugs, has a market value of $9.5 billion. That value comes from a drug portfolio that includes tried-and-true cancer meds like Nexavar, now undergoing testing for additional uses besides its primary value as a treatment for liver and kidney cancer.

The company also sells the new colon cancer drug, Stivarga. Both Stivarga and Nexavar are marketed in partnership with German pharmaceutical firm, Bayer. Brand new to the Onyx lineup is Krypolis, a blood cancer drug that the Food and Drug Administration approved only last year, according to The Associated Press. Some analysts, Reuters said, have estimated that Krypolis will generate as much as $3 billion in annual sales when it finally peaks.

The overall attractiveness of oncology meds stems from high “per patient” costs (up to $100, 000) and the fact that medical insurance tends to cover cancer drugs in general.

In addition, Pfizer, already has a deal to pay Onyx royalties on a new breast cancer drug called Palbociclib and could eliminate those payments with a takeover. Novartis is interested because it has a strong position in cancer medicines and knows the sector well.

Don’t count Amgen out just because Onyx rejected its bid. The company has not indicated whether its $120-per-share offer was its “best and final” and at least one person familiar with the matter told Reuters they expected Amgen to participate in any bidding war that takes place.

And that’s not all. Additional anonymous sources told Reuters that other takeover suitors could include Bayer AG, AstraZeneca Plc (NYSE: AZN), and Merck & Co (NYSE: MRK) to name a few.

The field could get crowded – and expensive. Onyx closed at $131.33 Monday after jumping 51.3 percent on investor speculation about a possible deal to come.

Shares of other biotech companies rose Monday as well, on the strength of the developing news about Onyx. These included Ariad Pharmaceuticals (NASDAQ: ARIA), up almost 12 percent; Isis Pharmaceuticals Inc. (NASDAQ: ISIS), nearly six percent; and Seattle Genetics (NASDAQ: SGEN), up just under four percent.

Related: ETFs For an Onyx Takeover Battle

At the time of this writing, Jim Probasco had no position in any mentioned securities.