Biotechnology

Pharma saga shows bad lending’s long half-life

26 Apr 2012

Singlehandedly funding the 2007 buyout of Actavis, an Icelandic drugmaker, was one of Deutsche Bank’s worst boom-era moves. Failed M&A rescues, restructuring and $1.7 bln of charges followed. At least Watson Pharma is now ending this unhappy saga with a near-$6 bln takeover.

Biotech’s blistering M&A pace should continue

23 Apr 2012

The industry is off to one of its best years in a decade. As Pfizer’s sale of its nutrition business for $12 bln suggests, Big Pharma is forgoing mega-deals for smaller, targeted acquisitions of innovators like Ardea and Amylin, who are needed to refill empty drug pipelines.

Pfizer baby food gives Nestle a $12 bln sugar rush

23 Apr 2012

The Swiss food giant is paying a hefty 4.9 times sales for the U.S. group’s infant nutrition arm. That’s partly down to an M&A tug-of-war with rival Danone. But it also reflects Nestle’s rock-solid balance sheet - and the scarcity of big emerging-market growth plays.

Glaxo’s Human Genome bid smacks of opportunism

19 Apr 2012

The British drugmaker is already a partner of Human Genome Sciences and is thus the obvious acquirer. But the U.S. biotech is wise to rebuff a $2.6 bln offer. GSK can take big cost savings, and the bid looks cheap even given scaled-back expectations for the duo’s key product.

Roche runs out of room in $7 bln Illumina bid

18 Apr 2012

The Swiss drugmaker is walking away after failing to cajole the gene-sequencing firm into talks. Shareholders clearly weren’t pushing Illumina to the table, and a wobble in its shares now won’t change that. But Roche could return if the stock continues to languish.

AstraZeneca needs a more active chairman

10 Apr 2012

Investors are frustrated with the Anglo-Swedish pharma group’s shrinking collection of blockbuster drugs. It’s time for a major strategic review, led by an active leader willing to tackle taboo topics. There’s an opportunity - a new chair is set to be approved later this month.

Not all IPOs are about smart money cashing out

3 Apr 2012

Biotech firms exist in a topsy-turvy universe where early backers actually buy up large chunks of additional stock when their companies go public. In theory, that may sound like a refreshing alternative to hot Internet deals like Facebook. But caution is nonetheless warranted.

Roche makes tactical gain with Illumina sweetener

29 Mar 2012

The Swiss drugmaker has upped its unsolicited offer for Illumina by $1 bln to $6.7 bln – a smidgen above the gene firm’s market value. That puts real pressure on the board to talk. The stage is set for Roche to add a last sweetener in return for a recommendation.

Big pharma needs new compact with emerging markets

13 Mar 2012

India has joined Thailand and Brazil in granting a licence to a generic drugmaker at the expense of a global player. The likes of Bayer will protest but a compromise – with multinationals obliged to take a price hit in return for continued patent protection – is probable.

Roche’s resolve on Illumina will be tested hard

25 Jan 2012

Investors reckon Roche’s $5.7 bln hostile bid for the U.S. gene-sequencer will be improved. That’s sensible: the Swiss drugmaker has sweetened deals before, Illumina is a long-term strategic bet and counter-bidders could emerge. To win, Roche may have to swallow a super premium.

Antitrust watchdog rivalry may spell M&A trouble

12 Jan 2012

The U.S. Justice Department surpassed the Federal Trade Commission in antitrust enforcement last year. But signs that the FTC will block pharmacy provider Omnicare’s bid for PharMerica suggest a new hard line. Competing cops on the beat could gum up Wall Street’s deal machine.

Hep C deals show how biotech premia get infectious

9 Jan 2012

Bristol-Myers will pay a 163 pct premium for Inhibitex. Recent bids for other hepatitis C specialists have also gone skyward. In any hot biotech field, there are few targets and most have insiders with big stakes. Satisfying their belief in their efforts is what drives prices up.

Pharma center of gravity shifts eastward

6 Dec 2011

Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.

Pharma stocks no safe haven in austerity storm

1 Dec 2011

Drug shares have traditionally weathered economic storms well. Yet today the sector trades at a 20 pct discount to the market. With budget cuts the medicine of choice for solving government deficits, investors are rightly anticipating further knocks. The sector is best avoided.

Investors too skeptical on Gilead’s $11 bln bet

21 Nov 2011

Helped by acquisitions, the biotech made it big with drugs for HIV. Now, by buying Pharmasset, it’s trying the same trick with hepatitis C. Sure, Gilead is paying a stonking 89 pct premium. But wiping some $3 bln off the buyer’s market value looks like an over-reaction.

Biotech firm Verastem’s IPO carries some big risks

11 Nov 2011

Founded by the man who sold GSK his last creation for $720 mln, the firm wants to raise $50 mln. Yet it has no revenue, no drugs in trials and looks predicated on unproven science. Verastem may deserve funding - but from venture capital, not public market, investors.

Pfizer milk bid could fortify China’s M&A hopes

25 Oct 2011

Mengniu Dairy’s bid for the U.S. pharma giant’s $10 bln nutrition unit would make strategic sense. China can gain from deals pegged on rising consumer demand rather than cheap labour. Buying foreign brands may also help address food safety problems, if bidders tread carefully.

Abbott prescribes a dose of financial engineering

19 Oct 2011

The runaway success of blockbuster drug Humira has been a mixed blessing. It larded the healthcare group’s attractive nutrition and generic drug businesses with a pedestrian Big Pharma multiple. Splitting off its research drug arm should rectify the valuation mismatch.

Carlyle gets slice of stale bread-and-butter deals

3 Oct 2011

The $3.9 bln buyout of drug developer PPD is one of the year’s biggest. The by-the-book takeover provides a nice premium to shareholders and leveraged upside for buyers Carlyle and H&F. But the seemingly simple deal was a slog and is a reminder of how few there are to go around.

Hostile bidder tries for poison-pill knockout

14 Sep 2011

The takeover defense was left on the ropes when a Delaware judge reluctantly allowed Airgas to fend off an unwanted suitor. Omnicare, smelling blood, is going back to the court to challenge PharMerica’s recalcitrance. But patience may work better than aggression in this fight.