Biotechnology

AstraZeneca’s bets $15.6bn on biotech

23 Apr 2007

The UK pharma paid 25% more than the market expected to win the auction for the US biotech MedImmune. That s the price of potential growth. Astrazeneca is paying 12 times revenues, but sees huge synergies. And biotech could help solve its own growth problem.

Amgen shows perils of being aggressively clever

20 Apr 2007

The biotech giant s sale of $5bn worth of cheap convertible debt to buy back stock looked mighty smart last year. The only problem the stock is down 12% since because Amgen s attempt to expand its main drug into a minor area blew up in its face.

KKR’s £11bn bid turns screw on Boots

30 Mar 2007

A 30% premium is a full price, and there's an added risk if the bidder walks: some of group's top management, led by Pessina, may walk too. KKR has probably done enough to wring a recommendation from the board. A counterbid, while possible, would be tricky to pull off.

Alliance Boots £10bn LBO poses major conflicts

9 Mar 2007

Stefano Pessina, the executive deputy chairman, wants to take the UK drugstore chain private, with the aid of buyout firm KKR. Trouble is, Pessina is an insider and wants to retain the existing management. That s a conflict that will have to be handled carefully.

Merck generics auction may fetch juicy price

16 Feb 2007

Predators of all sizes are eyeing the German unit. Its size and distribution networks make it an attractive buy in a consolidating sector. The likelihood of an auction may lead to a Corusstyle shoot out. That could leave Merck laughing all the way to the bank.

Herbalife $2.9bn buyout looks cheeky

6 Feb 2007

Investors are showing their gumption by resisting lowball MBOs. Rejecting Whitney s $2.9bn offer for the diet pillmaker is a no brainer. The offer from the private equity firm run by Herbalife s chairman came below the stock s price in January before a profit warning.

Sanofi faces financing dilemma to bag E53bn BMS

2 Feb 2007

Given the huge synergies on offer, the French group could afford to pay 20% on top of an inflated price and still create a bit of value. But Sanofi's boss doesn't like excessive leverage and the BMS shareholders may not be too enamoured of French paper.

Sanofi-Bristol deal speculation looks credible

29 Jan 2007

Ever since the $52bn US pharmaceuticals group ousted its chief executive in September, it has been de facto on the block. Given their joint Plavix arrangement, Sanofi looks in pole position to pounce.

CVS counterpunch not enough

17 Jan 2007

The drugstore chain has sweetened its contested $23bn bid for benefits manager Caremark and promised to lever up the combined company. Yet Caremark stock still trades above CVS bid and the slightly higher offer from rival suitor Express Scripts. The battle isn t over yet.

Smith & Nephew hasn’t dodged the Biomet bullet

19 Dec 2006

A consortium of private equity firms may have beaten it in the $11bn buyout of the orthopaedics maker, sending S&N shares higher. But you can bet Biomet will be back on the menu in a few years time, after its options probe is finished and at a higher price than now.

Pfizer catastrophe is good news for biotech

4 Dec 2006

Scrapping torcetrapib, a drug with $15bn in potential annual sales, has badly wounded the drug giant. Cutting Pfizer s sales force and other stopgap measures won t cut it. The cash rich group is likely to start buying biotechs left and right.

Democrats could torpedo drug industry growth

14 Nov 2006

The new US Congressional leadership wants the government to use its purchasing leverage to negotiate discounts from drug makers. The price reductions over the next seven years are potentially large enough to wipe out growth in drug sales worldwide.

S&N takeover of Biomet would make industrial sense

2 Nov 2006

A potential $20bn merger would help Smith & Nephew to grow its US market share and add value from crossselling orthopaedic products. But Biomet is a big mouthful for S&N to swallow. And the UK group would need to raise a significant amount of debt to fund the deal.

AstraZeneca and Glaxo investors suddenly recall risk

26 Oct 2006

The two UK pharma giants have seen their share prices crushed by the failures of highrisk drugs under development. Pharmas look vulnerable to even small disappointments. Sector multiples have expanded, but growth in global drug sales continues to fall.

Merck investors assume Vioxx wounds skin deep

29 Sep 2006

The drug group s stock has largely recouped its losses since the drug s recall. In fact, Merck now trades at a premium to rival Pfizer This makes little sense. Merck s earnings growth should be stagnant over the next few years. And Vioxx s legal costs could be staggering.

J&J wins by losing

26 Sep 2006

Boston Scientific beat J&J to the punch in the fight for Guidant. But it was no victory for Boston shareholders. And if J&J wins its $5.5bn suit against Boston, it might well be the most profitable deal that never happened.

Bayer could be next drug maker for consolidation

26 Sep 2006

Midcap drug makers face an ugly future. So Serono, Altana and Schwarz Pharma have all pulled the ripcord in the past month. Competitors Bayer, Novo Nordisk and Akzo Noble would seem like natural followers. But the devil is in the details.

UCB snaps up Schwarz in E4.4bn deal

25 Sep 2006

The race to consolidate is clearly on. The Belgian group is the third midsized European drugs group to buy a rival in the past week. What has unblocked the dam? It s that the sellers have all dropped their prices, perhaps because they are scared of being left on the shelf.

Bristol-Myers investors must wait for saviour

22 Sep 2006

Investors in the US drug group have spent the last ten years wandering in a desert of poor returns. Now a takeover bid beckons. However, a lingering patent dispute and continuing government supervision of Bristol mean any bid is unlikely to emerge before June.

Merck will struggle to excite with E11bn Serono buy

21 Sep 2006

The German drugs and chemicals firm tried but failed to buy Schering this year. Its second choice, Serono, looks second rate. The Swiss firm relies on a handful of drugs and has been on the market for almost a year after other firms walked away.