It's been a rocky road for hepatitis C drugmaker Idenix Pharmaceuticals (NASDAQ:IDIX), but investors are smiling after Merck (NYSE:MRK) announced on Monday that it's buying the biotech for $3.85 billion, more than a 230% premium on Friday's closing price. Even investors who bought at the previous top a few years ago when investors had high hopes that every hepatitis C biotech was going to get bought still had a profitable ending.

Fellow hepatitis C drugmaker Achillion (NASDAQ:ACHN) was up big yesterday, with investors hoping that it'll get bought out as well, but investors should be careful here; there are diminishing potential returns as each hepatitis C drugmaker gets picked off. With Merck now owning Idenix Pharmaceuticals, there's one less company that might want to purchase Achillion.

Gilead Sciences (NASDAQ:GILD) traded down, presumably because investors are worried that Merck will become a stronger competitor with Idenix's assets, but there is upside for Gilead Sciences' investors: Merck's purchase is a sign that the pharma thinks there will be plenty of patients a few years from now, when Idenix Pharmaceuticals' drugs could make it to market.

Watch the following video for thoughts on the deal from senior biotech specialist Brian Orelli and health-care analyst David Williamson, including the potential wildcard: patents.

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Brian Orelli has no position in any stocks mentioned. David Williamson owns shares of Merck. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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