Biotechnology

Big pharmacy deal confronts past and now present

1 Sep 2011

Wall Street is betting there’s almost no chance trustbusters will approve the $29 bln acquisition of Medco by rival Express Scripts. Though overly pessimistic, two nixed healthcare mergers in the late 1990s and the challenge to AT&T’s deal provide good reason for skepticism.

Doubts over $29 bln pharmacy deal look overdone

17 Aug 2011

Based on the yawning 26 pct gap between the Express Scripts offer and where Medco shares trade - lower than even before the bid came along - investors are super-spooked about antitrust issues. The market pricing in zero chance of success makes it a cheap option to buy.

Sweden’s a stretch for pharma deal-machine Valeant

27 Jul 2011

Valeant, the dealhungry North American drugmaker, may have its eyes on Meda, its $3.5 bln Swedish lookalike. Both prefer growth through M&A to heavy spending on research. But the similarities do not point to synergies. Scant geographic overlap also argues against a merger.

Express/Medco deal is antitrust roll of the dice

21 Jul 2011

Express Scripts is offering $29.1 bln for Medco, creating a kahuna in the pharmacy benefits industry. That looks like a provocation to trustbusters hence no regulatory break fee. But by highlighting Medco's flaws, the duo is emulating AT&T's tactics. Victory will be elusive.

Takeda takes expensive route to emerging markets

12 May 2011

Buying Switzerland's Nycomed for a possible $14 bln would refresh the Japanese pharma group's pipeline and boost exposure to fastgrowing economies. With almost $11 bln of cash, financing isn't a problem. And a deal might just stack up if Nycomed's performance is about to turn.

Sometimes extra-rich pay packages actually do work

10 May 2011

Valeant's CEO gets up to $4 of every $100 he creates for shareholders unless investors do poorly. Then he makes zilch. He's already made some $200 mln since 2008. Such aligned incentives explain why the drugs group walked away from a bid battle. It's a plan worth replicating.

Hasty hostility costs Valeant its Cephalon quarry

2 May 2011

The drugmaker hoped to snaffle up rival Cephalon in weeks with a proxy fight. Valeant made it clear it attached little value to the target's pipeline and wouldn't get in a bidding war. That left plenty of room for white knight Teva to swoop in for Cephalon with a $6.8 bln offer.

J&J may have more on overseas shopping list

27 Apr 2011

The U.S. health giant's $21.3 bln purchase of Synthes is its largest ever. A big deal seemed a way for J&J to deploy its $28 bln of cash, largely trapped overseas. But it is paying mostly in stock. Despite problems with its current businesses, J&J may have further deals in mind.

J&J earnings show Synthes just a nice distraction

19 Apr 2011

A series of recalls has buffeted the U.S. health conglomerate, as firstquarter results show. Buying medical device firm Synthes for around $20 bln would secure a rarelyavailable gem and handily consume cash trapped overseas. But it wouldn't fix J&J's quality issues.

Actelion makes cunning but slow tactical retreat

6 Apr 2011

Activists seeking change at the Swiss pharma have won a small governance victory with the appointment of former GSK CEO JP Garnier as chairman designate. While it is not clear Garnier has the right ideas, it may now be harder for the activists' board slate to win election.

Biotech buyer tries rare bid experiment

30 Mar 2011

Valeant's unsolicited $5.7 bln offer for Cephalon bucks a trend in the drug discovery business. Aggressive approaches don't usually work because founders with big stakes can marshal opposition and scientists can just walk. But in this case, neither factor is a barrier.

Pfizer diet shouldn’t be hard to start

24 Mar 2011

The drug giant's years of expansion haven't fattened shareholders' wallets. With executives responsible for bloating Pfizer leaving, it's a good time for a fresh start. Spinning off the animal health, consumer and nutrition units looks a profitable way to slim down.

Elliott takes gloves off in Swiss activist assault

17 Mar 2011

The NY hedge fund is dead serious in demanding Actelion launches a strategic review and has assembled a slate of directors to storm the Swiss biotech's board. In defence, the $7.8 bln firm hired Goldman and Credit Suisse. Elliott's battle could be protracted but looks winnable.

Walgreen shows rival chain CVS benefits of focus

9 Mar 2011

The $39 bln drugstore chain is selling its pharmacy benefits arm to hone in on retailing. CVS took the opposite tack, paying $26 bln for Caremark. That dog of a deal, which has dragged down performance and sparked an FTC inquiry, looks increasingly like it should be unwound.

Sanofi’s $20 bln bid shows it needs Genzyme badly

16 Feb 2011

The French pharma group has upped its cash offer for the U.S. biotech, and will pay a further $3.8 bln if certain milestones are met, taking the total premium to over 60 pct. After six months of talks, the upscaled bid shows just how badly Sanofi needs to repair its pipeline.

M&A add-ons don’t make for better mousetrap

16 Feb 2011

The contingent value rights structured for Sanofi's purchase of Genzyme helped seal the $20 bln deal. It shows how financial engineering can sometimes bridge divides. But the complexity of CVRs and their unpopularity among investors should limit their use to very special cases.

Actelion must use activist row to its advantage

8 Feb 2011

The Swiss pharma group faces bold calls from UK hedge fund Elliott Advisors to reform its board and explore a sale. Elliott's tactics may be questionable, but its demands are reasonable. The question is how Actelion can use the situation to get an auction going.

UK mustn’t learn wrong lesson from Pfizer closure

2 Feb 2011

After the U.S. drug giant decided to shut its UK R&D centre which developed Viagra, there'll be many calls for an aggressive industrial policy. But the right way to boost growth is through improved infrastructure, skills and investment while cutting taxes, not by picking winners.

Sanofi, Genzyme head towards uncertain compromise

14 Jan 2011

The U.S. biotech may succumb to Sanofi's advances if both groups can agree on a payout tied to future performance. A contingent value right, worth some $1.5 bln, may leave investors wanting. But with Genzyme still struggling, this may be the best choice.

Smith & Nephew looks nice but unnecessary for J&J

10 Jan 2011

Buying the $10 bln UK orthopedic company would give the U.S. conglomerate scale to push back against larger hospital chains. It would also be an attractive use of cash stuck overseas. But J&J may heed potential antitrust concerns and its own history of financial discipline.