Biotechnology

Pharma lands one-two punch on government finances

4 Dec 2012

A U.S. court has ruled a drug salesman was exercising his right to free speech by promoting a drug for non-approved uses. That’s worrying. And if upheld by the Supreme Court, companies will pay fewer multi-billion dollar fines and useless healthcare spending will increase.

Reckitt enters vitamin wars with a Bang

16 Nov 2012

The consumer powerhouse behind Cillit Bang has gatecrashed Bayer’s bid for U.S. vitamin maker Schiff. At a 23.5 pct premium and 16.5 times EBITDA, the $1.4 bln counterbid is potent stuff. But trust Reckitt to extract big synergies, as it did in previous punchy deals.

If only weed could inspire fiscal joint action

14 Nov 2012

Ideological foes Barney Frank and Ron Paul have passed the peace pipe for marijuana, together urging the feds to stay mellow about new decriminalization votes. Such kinship would keep a fiscal deal from going up in smoke. But anyone who sees similar common ground must be high.

Investors’ hunger for yield feeds instability

13 Nov 2012

With bond buyers fighting for every basis point, highly rated companies and sovereigns are sensibly extending the duration of their debt. But what’s good for balance sheets looks bad for financial stability. The longer the bond, the bigger the loss when rates eventually rise.

Amped-up Carlyle gulps double dose of muscle milk

15 Oct 2012

After bulking up with acquisitions all this year, its first as a public company, the buyout firm is now stretching the balance sheet at vitamin maker NBTY to pay itself a $720 mln dividend with PIK-toggle debt. Such juicing may be easy again, but can have risky side effects.

Valeant deal shows how big M&A can add value

4 Sep 2012

Large acquisitions usually merit skepticism. Valeant’s $2.6 bln deal for Medicis looks an exception. The Canadian-U.S. drug maker is paying a $700 mln-plus premium for its rival, but cost cuts could be worth more than twice that. And the fit is good. No wonder both stocks surged.

Pharma industry can’t sugarcoat generic drug deals

16 Aug 2012

Pfizer is the latest company to sustain its patent over a medication by handing a rival exclusive, but delayed, rights to a generic version. That’s an anticompetitive quid pro quo, even if cash didn’t change hands. A U.S. court can protect consumers’ wallets by saying so.

The $10 bln LBO may again be within reach

1 Aug 2012

Even if private equity firms don’t scoop up $8.5 bln LabCorp, a buyout on that scale looks possible. Big funds collectively have some $500 bln of purchasing power, lenders are hungry for yield and terms are easing. But it would also mean a return to the dreaded club deal.

Quashing human-gene patent could speed cancer cure

19 Jul 2012

Inventors deserve rewards for advances against the disease. But a U.S. company’s claim to own DNA linked to breast cancer goes too far. It takes credit for nature’s handiwork while stifling others’ research. A court ruling against the patent would best serve both law and science.

Purge likely after U.S. obesity drug binge

18 Jul 2012

Two drugs for weight loss from biotech firms have been approved by the FDA in the last month. With American obesity rates rocketing, analysts are eyeing fat sales and bankers are weighing mergers. But history suggests the enthusiasm may last about as long as the typical diet.

India’s pro-poor policy may be getting healthier

5 Jul 2012

A $5.4 bln plan to provide free generic drugs could mean the government is finally addressing its woeful healthcare system. It has lost out to food and fuel subsidies for too long. The drugs plan may spook Big Pharma, but long term even foreign drugmakers could benefit.

Bristol-Myers and Astra make fat bet on obesity

2 Jul 2012

The U.S. and UK drug giants are teaming up in the $7 bln purchase of Amylin. Seven times estimated sales is a hefty price for a biotech whose main drugs face stiff potential competition. But Amylin’s focus on diabetes, a sadly expanding market, makes this a healthier endeavor.

Gas giant Linde expands to fill healthy space

2 Jul 2012

The German company will pay $4.6 billion including debt for Lincare, a specialist in respiratory gases. That is a full-looking 9.3 times EBITDA and synergies will be limited. But Linde boosts its U.S. footprint - and secures a route to growth outside its consolidated core market.

Alliance Boots boss pulls off quite a coup

21 Jun 2012

Normally when you sell a company for a fat premium, you lose control. But Stefano Pessina has extracted both a rich price from Walgreen and will end up as by far the largest shareholder in the merged group, with a 15-16 percent stake.

London bankers get swift kick from Boots deal

20 Jun 2012

The UK pharmacy chain’s sale is a bitter pill for the City to swallow. Big banks that backed KKR’s 2007 mega-buyout of Boots were stuck with the debt as the crisis struck. Adding insult to injury, none were hired to advise it on the Walgreen deal. The timing couldn’t be worse.

KKR gets rich prescription for top-of-market LBO

19 Jun 2012

Walgreen’s two-stage acquisition of European rival Alliance Boots should more than double the investment KKR and its partners made at the height of the 2007 boom. What the U.S. drug chain’s investors will get for their money - as much as $16.2 bln - is harder to fathom.

Pfizer animal care spin-off will unleash value

7 Jun 2012

The name for the $165 bln pharma giant’s veterinary business - Zoetis - is pretty awful, but its prospects are bright. The coming IPO and separation of the unit, maybe worth $16 bln, underline Pfizer’s more than 15 percent valuation discount to peers. The gap isn’t justified.

Vertex’s $2.5 bln error more comedy than tragedy

29 May 2012

The biotech firm’s value plunged 18 pct after it admitted a basic statistics mistake, confusing relative with absolute improvement for a new drug combination for cystic fibrosis. Such a bone-headed error is careless, but comical rather than fatal. The share slump looks overdone.

GSK’s hostilities may follow Genentech playbook

9 May 2012

Britain’s biggest drugmaker is bypassing the Human Genome Sciences board with its $2.6 bln offer - and has implied the price is firm. The GSK-HGS links probably rule out a white knight. But echoes of Roche’s 2008 tilt at Genentech suggest there may yet be a sweetener.

AstraZeneca now needs a cultural revolution

26 Apr 2012

The old CEO is gone and a new chairman will come faster than planned. The board has moved decisively to address shareholder concerns about strategy and performance. But the pharma group’s difficulties are ingrained in its psyche. The company needs more than new leaders.