Biotechnology

Grubby assets shine in $5.6 bln tax arbitrage deal

7 Apr 2014

Tyco spinoff Mallinckrodt is paying a 27 pct premium for Questcor, a firm barraged by regulatory inquiries. Why do it? The transaction moves profits to Ireland, where the acquirer is based. It may be buying as many problems as tax savings, however.

Ranbaxy sale shows risk in Japanese M&A adventures

7 Apr 2014

Daiichi Sankyo is handing control of the troubled Indian drugmaker to local rival Sun Pharma in a $3.2 billion all-share deal. The investment has lost almost 40 percent of its value in six years. It’s a reminder of all that can go wrong when Japanese companies venture overseas.

Baxter puts conscious uncoupling on pharma radar

27 Mar 2014

The $40 bln healthcare giant is separating its biotech and medical products units. Baxter’s spinoff history suggests this latest move will create value for shareholders. This, and the success of Pfizer’s and Abbott’s recent splits, will encourage other pharma giants to follow.

Rival’s split makes it harder for Dow to resist

10 Mar 2014

FMC, a $10 bln pesticide-to-battery-parts maker, is splitting its fast-growing ag and pharma businesses from stodgier commodity minerals. It’s similar to the breakup activist Dan Loeb wants at Dow Chemical. Boss Andrew Liveris is standing firm. FMC’s move weakens his case.

Big Oil could use some venture capital mojo

28 Feb 2014

An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.

Actavis makes pharma deals look generic

18 Feb 2014

Its $25 bln acquisition of Forest Laboratories follows a familiar formula in the sector. Uppity investor? Check. Low-tax jurisdiction? Check. Buyer’s stock rises? Check. And over $8 bln of value created means financiers will keep busy with their own prescriptions for M&A success.

Guest view: Europe risks wasting gene therapy advance

14 Feb 2014

Europe lags the U.S. in providing promising companies with the investment needed to get to market. Without better financing solutions, it won’t share in the industrial future of gene therapy, says the CEO of Syncona, the Wellcome Trust’s life-sciences investment company.

AstraZeneca challenged but no longer cheap

6 Feb 2014

The UK pharma group says patent expiries will hit earnings harder than analysts expected. Management sees growth returning in 2017, but rivals like Sanofi offer a less risky earnings trajectory. After a good run in recent months, AstraZeneca’s shares are taking a lot on trust.

The first $1 million drug may be a bargain

4 Feb 2014

An approved gene therapy by uniQure, whose IPO is slated for this week, has an eye-popping cost. It could eliminate a lifetime of hospital trips for sufferers of a rare disease, but it’s hard to say because so few patients have been tested. Even so, it may be rationally priced.

Merck share price slump pumps up M&A pressure

27 Jan 2014

Is anyone worth 880 million euros? Merck stock dropped 10 percent after its finance chief left abruptly. The plunge reflects the German pharma group’s challenges and inflated hopes of transformative M&A. Quick completion of its AZ Electronics purchase would calm fraying nerves.

Common sense prevails as McKesson lands Celesio

24 Jan 2014

U.S. drug wholesaler McKesson has revived its 6.2 bln euro takeover of German peer Celesio. That makes sense: the bulletproof new deal benefits the buyer; the selling Haniel family; and Elliott, the U.S. hedge fund that had built up a blocking stake.

Big Pharma should nourish biotechs, not eat them

13 Jan 2014

Productive drug labs rarely survive M&A intact. The market rightly loves Alnylam’s purchase of assets from Merck and simultaneous $700 mln sale of a chunk of itself to Sanofi. Instead of killing the golden goose to try to harvest eggs, Sanofi’s deal could encourage production.

Botched $8.5 bln Celesio deal creates only losers

13 Jan 2014

U.S. drug wholesaler McKesson has failed to buy its German peer - despite both sides and most shareholders wanting a deal. The drawn-out process exposed weaknesses at Celesio and in Germany’s M&A rules. Elliott, the hedge fund that tried to play kingmaker, will suffer too.

Merck woes show animal drugs are no panacea

30 Dec 2013

Animal medicine, whether for livestock or pets, is booming. Pfizer’s spinoff, Zoetis, trades at a fat valuation premium. But controversy over Zilmax, Merck’s muscle-building feed additive, suggests that an increasingly complicated food chain comes with its own investment risks.

Astra’s $4.1 bln divorce from BMS JV looks happy

19 Dec 2013

The pharma group is taking full control of its diabetes venture with Bristol-Myers Squibb. It’s a logical and fairly priced move enabling each firm to focus on core strategies. The assets may not be great, but Astra’s fightback against its fundamental challenges is gaining ground.

Animal health carve-ups to come two by two

13 Dec 2013

The business is pharma’s secret cash cow: R&D costs are lower, scrutiny’s gentler and growth faster than human care. Shareholder pressure is forcing firms from Novartis to Merck to explore sales, JVs or IPOs. The risk of seller’s remorse means buyers may have to pay top dollar.

Elliott is unlikely to block Celesio takeover

10 Dec 2013

The hedge fund has amassed enough votes to block McKesson’s $8 bln takeover bid. The U.S. offer for the German drug wholesaler does look a bit stingy. But Elliott will suffer if the deal fails - so McKesson can probably hold firm. Elliott has other ways to make money here.

Merck’s pricey deal will make material difference

5 Dec 2013

Germany’s drugs group Merck has made a toppy 1.6 bln stg offer for the UK’s AZ Electronic Materials. The deal offers synergies and diversification, and deploys otherwise idle cash. Since pharma valuations are rich, the speciality electronics firm offers relatively cheap growth.

Bayer can pay more for cancer blockbuster partner

26 Nov 2013

The German drugmaker has made a preliminary 1.8 bln euro bid for Norwegian partner Algeta. The target’s shares immediately priced in a higher offer. That looks right. A counterbidder is unlikely. But Algeta’s cancer drug has huge potential and Bayer can afford to pay more.

DSM’s pill deal oddly blends carve-out and LBO

19 Nov 2013

The world’s top vitamin maker is merging its drug-production arm with a private equity-backed rival. The unit was a subscale distraction. But the cost benefits of the $2.6 bln tie-up are hard to fathom. And DSM cedes control of the unit without cutting its economic exposure.