Healthcare

New CEO kitchen-sinks Valeant hangover

7 Jun 2016

Joseph Papa says some of the troubled $8 bln drug firm’s businesses are doing fine. But weak earnings and yet another downgrade sent the stock plunging on Tuesday. At under 10 pct of its peak value last year, the new boss will be trying to persuade investors the only way is up.

Bitter Pill: The Wild Rise and Fall of Valeant Pharmaceuticals

6 Jun 2016

As the embattled drugmaker embarks on its next phase under new CEO Joseph Papa, Breakingviews chronicles the financial razzle-dazzle that got the company into the mess in the first place. The ride all the way up to a $90 bln valuation and back down has been a wild one.

Valeant may strain to engineer way out the in door

6 Jun 2016

As the embattled drugmaker prepares to report its first results under a new CEO, it’s also seeking a new business model beyond acquisitions and price hikes. Financial razzmatazz sometimes works both ways, but Valeant’s debt and possible suitors could make it hard science.

Cox: Disruption flops will spare old-line targets

2 Jun 2016

Venture capitalists have wagered on plenty of highly valued startups to destroy the established corporate order. But some so-called unicorns, probably including Theranos, will turn out to be mythical. A wave of “gluenicorns” would be good news for public companies under threat.

J&J’s corpulence defense weighs heavy

2 Jun 2016

The bulging healthcare conglomerate is swallowing hair-care firm Vogue for $3.3 bln in defiance of calls to break up. J&J’s $312 bln market value makes it a hard target for activists. Yet its obesity has created ailments from poor M&A digestion to mediocre shareholder returns.

Thermo Fisher’s FEI deal holds up under microscope

27 May 2016

But that’s only if the healthcare M&A machine can boost sales at its $4.2 bln quarry. Reducing taxes and cutting costs at the maker of electron microscopes only gets Thermo partway to justifying the price tag. Thermo’s track record gives investors some comfort it can do this.

AstraZeneca glitch cements M&A discount

27 May 2016

A blockbuster drug the UK group bought in a $2.7 bln deal has been delayed. The production glitch could mean just a few months holdup, but highlights why Astra trades at a lower valuation than peers. Buying and selling businesses is a risky way to manage a looming patent cliff.

Health M&A’s shots of state oversight may be toxic

25 May 2016

Missouri trustbusters plan to oppose Aetna’s $37 bln union with Humana absent changes. That probably won’t kill the deal, but the U.S. insurers must still satisfy regulators in five crucial states and Uncle Sam. No wonder investors’ prognosis for this and similar mergers is grim.

Egos may kill $54 bln health deal before watchdogs

23 May 2016

Cigna and Anthem haven’t consummated their merger, yet the U.S. insurers are squabbling over a lawsuit, information sharing and executives’ roles. The disharmony could make the deal fall apart. At the very least, it will make it harder to push it past antitrust regulators.

Pfizer’s $5.2 bln Anacor bid dodges bigger issue

16 May 2016

The drug giant may have bagged a good deal for the maker of eczema and toenail fungus remedies – assuming Anacor gets all needed approvals and sales soar. Bolt-on acquisitions can be helpful, but the important question for $200 bln Pfizer remains: will boss Ian Read break it up?

Baidu selloff understates long-term health risks

10 May 2016

Regulators have ordered China’s top search engine to rein in healthcare advertising after a scandal. That could knock as much as a fifth off earnings. Investors who have marked the shares down by 13 pct so far may be underestimating the broader impact on Baidu’s business model.

Pfizer mulls actually having an M&A strategy

5 May 2016

The $205 bln drug giant’s last two huge acquisition attempts failed. Pfizer could yet try another merger to cut its tax rate, it could enter a potentially heated auction for $10 bln biotech Medivation, or it could split up. Dealmaking success depends on having clearer goals.

Stupid names can’t hurt good companies

5 May 2016

Healthineers, Siemens’ new brand for its healthcare unit, is reminiscent of a hero in a 1950s science fiction comic. Users of its brain-scanners are unlikely to care. For investors the goofy name is, at the margin, a good thing: it shows a spin-off may have become more likely.

Medical firms’ $18 bln merger lacks clear logic

3 May 2016

Healthcare data miner IMS is uniting with Quintiles, a manager of drug trials. Each will own about half the combined company, and other than some cost savings, the reasons for combining are a bit nebulous. The presence of buyout firm TPG on both sides may offer some clues.

Baidu shows health is a huge flashpoint in China

3 May 2016

A dying student accused the search giant of promoting false medical information. The ensuing probe has cut $5 bln from Baidu’s market value: a big move but not an overreaction. Health scandals are highly sensitive and authorities pay close attention to outbursts of online anger.

Abbott’s $25 bln buy inspires little investor hope

28 Apr 2016

It’s buying medical-device maker St. Jude at a $6.5 bln premium. Cost cuts cover less than half that, and earnings accretion doesn’t make it a good deal. Abbott’s value tumbled over $5 bln. Shareholders may recall that the target’s namesake is the patron saint of lost causes.

AbbVie grabs unicorn by its $10 bln horn

28 Apr 2016

The U.S. pharma giant is buying Stemcentrx, an eight-year-old cancer-drug developer backed by the blue-chip Founders Fund. Valued at $5 bln last fall, it was among Silicon Valley startups tarnished by recent markdowns. The sale suggests some hyped firms can still live the fantasy.

Hong Kong finds Alibaba dealmaking in poor health

26 Apr 2016

Regulators say the e-commerce group’s 2014 investment into its health unit breached takeover rules. Details are scarce and Alibaba does not have to compensate shareholders. Even so, the latest run-in is another reason for Hong Kong investors to be wary of Jack Ma’s company.

Tech discovering dark side to price deflation

19 Apr 2016

Illumina rode the rapidly falling cost of genetic sequencing to a $26 bln valuation as demand bloomed. But a warning of slower growth evaporated almost 25 pct off the stock. Heady multiples only survive if ever cheaper overheads foster ever more uses for a company’s products.

Abandoned Pfizer deal leaves all sides tainted

6 Apr 2016

The U.S. Treasury looks bad for changing the rules to kill the $160 bln merger with Allergan. Lawmakers’ inaction encouraged such tax-driven transactions. But Pfizer and CEO Ian Read bear the most responsibility for wasting time and resources pushing an overpriced, risky deal.