Biotechnology

UK companies benefit from takeover threat

9 May 2014

If AstraZeneca’s independence was guaranteed, would it have made as many difficult restructuring decisions as it has? The threat of being kicked out motivates management in pharma, much as in any other. Remove it and entrenched leaders will have no reason to improve.

Pfizer unlikely to avoid China anti-trust therapy

8 May 2014

The chance to vet a $106 bln deal for drug-maker AstraZeneca looks too good to pass up. Watchdog MOFCOM is keen to stand up for local consumers. It’s no bogeyman: decisions are slow but mostly well-reasoned. Pfizer might improve its chances by getting Astra’s board on-side.

AstraZeneca is not the UK science base

7 May 2014

UK politicians worry that a Pfizer takeover would erode British scientific competence. But if that foundation were strong, the deal would hardly matter. The drug industry has fundamental problems. That’s why Astra has been slashing R&D by itself, and cost-cutting is driving M&A.

Merck cashes in consumer chips for wise drug wager

6 May 2014

The pharmaceutical firm’s $14 bln sale of its Claritin-to-Coppertone business frees cash for developing a potentially breakthrough cancer medicine. With the company’s odds for success better than in years, selling high and doubling down on possible blockbusters seems a smart bet.

AstraZeneca implies surrender can be bought

6 May 2014

The UK drugmaker has launched its defence against Pfizer’s $106 bln approach by detailing a portfolio with a potential 73 pct of added sales by 2023. It sounds more like an inventory waiting to be valued than an argument for independence. The chances of a deal have barely fallen.

Tax steroids justify Bayer’s $14 bln Merck deal

6 May 2014

The German pharma giant is paying an eye-watering 21 times latest EBITDA for Merck’s consumer unit. The price is high in the context of achievable cost savings and hoped-for revenue benefits. But the acquisition makes strategic sense and sizable tax breaks will help.

Hugo Dixon: Do national champions merit protection?

5 May 2014

Only when the target is genuinely strategic and the bidder may not have the country’s interests at heart. In other cases, including Pfizer’s bid for AstraZeneca and GE’s acquisition of Alstom’s power business, governments should stay neutral.

Pfizer’s M&A churns out more pennies than pounds

2 May 2014

A $106 bln AstraZeneca bid would deliver savings. But drug mega-deals create little value. Pfizer could’ve bought most of the top biotech firms instead of Wyeth, its last acquisition, and had higher returns. Buying stakes in innovative companies is a preferable route to riches.

Astra has small tactical advantage over Pfizer

1 May 2014

Time can benefit bidders rather than targets – that’s why Kraft left Cadbury flailing for months. But uncertainties around regulatory clearance and Washington politics complicate the dynamics of Pfizer’s approach to AstraZeneca. The U.S. group will want a quick, recommended deal.

Pfizer tax arbitrage will hasten more deals

29 Apr 2014

The biggest charm of the U.S. drug giant’s $99 bln offer for the UK’s AstraZeneca lies in switching to a lower-tax domicile. The latest and largest such deal raises the odds Congress will tighten rules. Until then, Pfizer’s validation of the tactic will encourage copycats.

Pfizer needs to do more to win AstraZeneca

28 Apr 2014

The U.S. pharma group is pressuring Astra to engage by revealing fleeting past discussions about a $99 bln cash-and-stock approach. Pfizer will want to see this through. To extract more value, Astra CEO Pascal Soriot can rubbish Pfizer’s bid currency and talk up other deals.

U.S. investors see yet another big acquirer as hip

24 Apr 2014

Zimmer’s $13 bln deal for rival Biomet promises savings. But the medical device maker is giving too much away to its target’s private equity owners for that to justify a 15 pct, or $2.3 bln, pop in its market value. This time, enthusiastic share buyers are betting on growth.

Valeant’s M&A machine may soon overheat

24 Apr 2014

Some of the brain trust behind the hyper-acquisition strategy is leaving the board just as the pharmaceutical company embarks on its biggest deal. Buying Allergan would swell Valeant to $75 bln with debt of eight times EBITDA. Finding meaningful targets will be much harder.

AstraZeneca can avoid self-medicating with M&A

24 Apr 2014

Reported interest from Pfizer puts pressure on Astra CEO Pascal Soriot. He could bulk up by buying a rival like Actelion or Shire. Or he could find a merger partner. But as Q1 results show, Astra is refilling its pipeline and investors recognise this. Plan A is working.

Valeant will need even more fancy legal footwork

23 Apr 2014

The pharmaceuticals company and hedge fund boss Bill Ackman built their Allergan stake by deftly tiptoeing around disclosure and insider trading rules. But a poison pill, antitrust issues and other pitfalls remain for the many law firms in the deal to navigate.

Valeant can boost its $47 bln bid for Allergan

22 Apr 2014

The pharma M&A machine, working with hedgie Bill Ackman, thinks it can cut $2.7 bln of costs from the Botox maker. At Valeant’s single-digit tax rate, that’s worth nearly $25 bln. And that’s just the start of potential benefits. The deal would add up with a much bigger premium.

Dawn raid makes comeback via activist drone strike

22 Apr 2014

Agitators usually take a stake in a company and then try to make something happen. Bill Ackman has instead teamed up with Valeant Pharmaceuticals to grab a 9.7 pct interest in $40 bln-plus Allergan, with a hostile takeover ready for deployment. It’s a potent battlefield tactic.

Pfizer stock poses best argument against mega-deal

21 Apr 2014

Sure, buying $84 bln AstraZeneca would yield tons of savings, and put cash trapped overseas to work. But big pharma deals often create more harm than good. Pfizer’s deal binge last decade led to poor investment returns. Subsequent slimming down has caused it to nearly double.

Activists’ Walgreen tax push backs wrong horse

15 Apr 2014

Some shareholders want the pharmacy chain to move its HQ to Europe to cut its tax bill. That’d boost earnings, but fly in the face of popular sentiment and a growing official international consensus against the tactic. Investors would do better to put their weight behind reform.

Jury’s $9 bln pharma penalty is punitive overdose

8 Apr 2014

Japan’s Takeda and its diabetes drug partner Eli Lilly were ordered to pay the 10-figure sum for covering up cancer risks. Whopping fines are common in the high-risk world of pharmaceuticals. Past cases and judicial guidance, however, suggest that this one may go too far.