Biotechnology

Warner Chilcott IPO shows what JPMorgan will miss

20 Sep 2006

The 2004 buyout of the UK drugs group by a bankled consortium sparked controversy and nudged winner JPM out of private equity. Chilcott s upcoming float could result in the consortium nearly tripling its money. The associated returns will be sadly missed.

Glaxo’s $3.1bn tax hit could be blessing in disguise

13 Sep 2006

Now that the drugs giant knows the size of its settlement, it can and should concentrate on firming its flabby balance sheet. If it wants to buy BristolMyers it should pay more cash than paper. Or it could take on £17bn of debt for a megapayout to shareholders.

Bristol-Myers Squibb fully in play

12 Sep 2006

There was no hope for CEO Peter Dolan to hang on to his job after a Federal regulator overseeing the group called for his departure. But by naming as interim boss James Cornelius who hasn t been averse to selling companies in the past it has put up a for sale sign.

Alcatel shareholders should call Tchuruk’s bluff

7 Sep 2006

Contrary to what Alcatel's CEO is arguing, the corporate governance provisions of Lucent's merger can be voted down. True, Lucent and Alcatel could both walk. But they would more likely try to salvage the merger. The alternatives for both are too bleak.

Rite Aid’s $3.4bn acquisition is the right prescription

24 Aug 2006

And the firm s paying a fair price for Canadian Jean Coutu s US assets. But it s not a cure for all of Rite Aid s ailments. Adding 1,800 new stores polevaults the US pharmacy chain s efforts to expand its footprint against CVS and Walgreens. The US pharmacy chain has struggled to keep up with its larger competitors since its accounting scandal four years ago. The purchase of Canadian rival Jean Coutu s US stores will allow a fast catch up. And Rite Aid s not stretching finances to pay for them.

Sanofi stitched up by Apotex

9 Aug 2006

The French drug maker s attempt to coopt the generic drug manufacturer has completely backfired. This encouraged Apotex to introduce a generic version of Sanofi's blockbuster pill, Plavix. Eyes will now turn on Sanofi's other patents.

Can Reckitt sustain this sparkling performance?

24 Jul 2006

The UK household goods group grew twice as fast as its markets in Q2 and improved margins despite rising cost pressures. True, it's still early days for its Boots OTC drugs acquisition. And shares have had a good run. But this company is at the top of its game.

Nobel Biocare experiences teething troubles

20 Jul 2006

The E5bn dental group on Wednesday received a regulatory slap in the face by Swedish regulators over a core new tooth implant. Though it accounts for just 5% of sales, this may slow product development and damage credibility. This isn t reflected in the stock price.

Lucent warning ups pressure on Alcatel

11 Jul 2006

It's a little worrying that Lucent's customers are seen to be delaying orders. This is beginning to hurt the US telecoms group's business. Alcatel itself is already financially weak. It is taking a risk by merging with a company that is possibly even weaker and deteriorating.

Siemens/Bayer embody new spirit of German reform

30 Jun 2006

It s not just the German football team that is enthusiastically embracing reform. So too are some of Germany s stodgiest companies. The E4.2bn sale of Bayer s diagnostics unit to Siemens brings focus to both sides and helps them to play to their strengths. It s a winwin.

Barr’s $2.2bn purchase of Pliva makes sense

27 Jun 2006

The US generic drug maker fought off several competitors to buy the Eastern European firm. Contested auctions are normally bad news for bidders. But Pliva s expertise in making generic biotech drugs may mean Barr got a bargain.

Bayer wins E17bn bloody battle over Schering

14 Jun 2006

It has agreed to buy a 22% stake in Schering from Merck for E3.7bn. This means the potentially value creating deal can go ahead. But Bayer has said it may enter cooperative agreements with Merck. Investors should ensure any deal is done at arm's length.

Merck plays hard-ball in German drugs fight

13 Jun 2006

By building a 21% stake in Schering just before Bayer s offer closes, it has acquired the power to determine the outcome of the bid. What use will it make of this? The obvious thing would be to demand to carve up Schering with Bayer as a price for letting the bid proceed.

Pfizer should think twice about $15bn OTC sale

9 Jun 2006

The drugs group lost more than $4bn of value in a week when bids for the consumer arm came in much higher than expected. This may reflect concerns it will get hit with a big tax bill and then let the proceeds gather moss in its flabby balance sheet.

Merck’s stakebuilding in Schering looks odd

9 Jun 2006

In March, the German drug maker abandoned its hostile bid for competitor Schering after Bayer emerged as a white knight. In April, Merck said it wouldn t be a longterm shareholder. Yet it has now doubled its stake in Schering to more than 10%. What's it up to?

Glaxo purchase of OTC unit for $15bn would be an error

2 Jun 2006

The UK pharma group is reportedly preparing to bid a whopping 21 times operating profit for Pfizer s nonprescription drugs business. Doing so would be a strategic and financial mistake. The company would be better off concentrating on discovering new drugs.

Investor holds cards in Gambro battle

16 May 2006

The Swedish conglomerate s revised E4bn bid for the dialysis group hasn t quieted criticism this is an opportunistic bid because it is. But the 3.6% increase appears enough to swing sufficient votes behind Investor.

AstraZeneca pays for delaying CAT purchase

15 May 2006

The UK drug maker is paying a fat 70% premium for Cambridge Antibody, partly because it was still bound by an existing standstill agreement. Biotech groups are in essence an option. The agreement effectively extended CAT's maturity, which jacked up the price.

Fisher sells to Thermo for $11bn and low premium

8 May 2006

Given that Fisher is nearly 50% bigger than its buyer, and Thermo s management gets to take over, the 7% premium on offer seems cheap. Moreover, Fisher s managers had their own incentives to sell. Despite these issues it looks the deal will pay off for Fisher shareholders.

Pfizer presents first big CEO pay test

26 Apr 2006

Executive pay in the US may be as oversized as the food portions, but investors have been reluctant to tackle abuses. But two battles at Pfizer and UnitedHealth show how difficult it will be to reign in excess pay.