Healthcare

Pfizer-Allergan is dead, merger arb isn’t

6 Apr 2016

Some big funds were caught out by the failed $160 bln pharmaceutical merger, the second such “Arbageddon” after AbbVie-Shire. Embarrassing as that is, the business of betting on deals can withstand the shock: arb performance is okay, and big flops like this can be easily avoided.

Valeant plays chicken with death spiral

15 Mar 2016

The pharma company’s failure to file audited results has started a countdown to default that vaporized 40 pct of its market value in early trading. Executives are mulling selling assets. But with so many questions about its financials unanswered, Valeant’s outlook is bleak.

Best U.S. health-insurance merger may be none

10 Mar 2016

UnitedHealth’s four main rivals are fighting to push their deals past state and federal regulators. The $115 bln UnitedHealth will look smart if the mergers, each worth about $70 bln in current combined market value, are blocked. It might even win out if the deals pass muster.

Trumpcare looks unhealthily expensive

3 Mar 2016

Apart from repealing Obamacare, there are few specifics in U.S. presidential wannabe Donald Trump’s healthcare reform plan. But a first cut based on similar ideas suggests billions in extra federal costs despite millions fewer Americans being insured. That doesn’t seem so great.

Bayer CEO can bide time on agri-business spinoff

25 Feb 2016

A merger wave among agriculture-chemicals makers may entice incoming boss Werner Baumann to put the German drugmaker’s crop science unit in play. A sale or the like could fetch up to 39 bln euros and unlock value. Yet Bayer’s record revenue and rising profit mean there’s no rush.

Health woes show limits of Alibaba’s Midas touch

22 Feb 2016

A unit of the Chinese e-commerce giant has suffered a run-in with mainland regulators. Though shares in Hong Kong-listed Ali Health soared when Alibaba invested last year, reality has proved less exciting. It’s a reminder that even Jack Ma can’t cure investors’ loss of faith.

A vexing question for Watson: Why is IBM surging?

18 Feb 2016

Big Blue’s market value rose by about $6 bln after it agreed to buy a healthcare analytics firm for $2.6 bln. Giving IBM’s artificial-intelligence platform more data to chew on is useful, but investors’ glee over an opaque addition to an enigmatic business effort is confusing.

Two U.S. scandals evoke Galbraith’s bezzle

9 Feb 2016

Bad practices led to CEO departures at Blackstone-backed mall owner Brixmor and HR software unicorn Zenefits. It’s a useful reminder of a Depression-era observation that good times mask bad behavior, but hard times expose it. These examples may be just a taste of what’s to come.

Bad finance: the dangerous drug of EPS accretion

8 Feb 2016

AstraZeneca’s chief executive says he’s done with deals, unless they are accretive to earnings right away. That could rule out some good acquisitions, and rule in some terrible ones. Judging transactions by their effect on earnings per share is common, and a most unhealthy habit.

AstraZeneca pay contortions get ever more tangled

4 Feb 2016

The UK pharma group may miss the earnings targets Chief Executive Pascal Soriot must meet to get his bonus. But it may adjust Soriot’s goal to reduce the effect of “dilutive” acquisitions. There’s logic to that, but Astra’s accounting gymnastics undermine its rigour on pay.

Last thing Brazil’s economy needs is Zika panic

3 Feb 2016

The toll the virus may take on unborn babies is tragic, but it isn’t as infectious as Ebola or SARS. A bigger worry for tourists and Olympic athletes is dengue fever. Direct Zika costs also should be negligible. The danger is that headlines fracture already fragile confidence.

Glaxo self-help looks better than surgeon’s knife

3 Feb 2016

The UK pharma group has come under pressure to split itself up after weak performance. Latest results show Glaxo is coming to terms with its challenges. A breakup wouldn’t create much value, absent a premium bid. That gives Chief Executive Andrew Witty breathing space.

Express Scripts left vulnerable by contract spat

1 Feb 2016

Shares of the $48 bln drugs middleman were dealt a blow when heavyweight insurer Anthem went public with ambitions to get a better deal. Express will want a quick resolution before serial dealmaker Stefano Pessina at Walgreens Boots opportunistically lobs in a lowball bid.

Alere board’s diligence brings 51 pct premium

1 Feb 2016

A $5.8 bln sale to $56 bln healthcare group Abbott caps a series of good decisions. Appointing a separate chairman, jettisoning Alere’s deal-hungry founder, rejecting his low-ball bid and focusing the business all helped. It shows what engaged investors and directors can achieve.

Oil slump seriously harms Saudi Arabia’s health

1 Feb 2016

Big cuts to healthcare spending show the many ways in which low prices are putting strain on the Kingdom’s economy. Treating Saudi’s population of diabetics would absorb 15 percent of oil export revenue at $20 a barrel. Private investors will be needed to fill the gap.

Novartis blurry outlook merits investor pink-eye

27 Jan 2016

The Swiss pharma group disappointed with earnings and forecasts. It’s a combination of drug patent pressure and challenges in its eyecare unit Alcon. Neither can be quickly fixed and more radical action seems off the table. A return to Novartis’ premium rating isn’t imminent. 

Shire’s merger with Baxalta looks a little peaky

11 Jan 2016

The drugmaker’s Chief Executive Flemming Ornskov has clinched his deal to buy haematology specialist Baxalta for $35 billion. The deal brings Shire scale in rare diseases, but offers few cost synergies, plenty of risk and relies on revenue growth that may be optimistic.

Biotech begins its annual bash with a hangover

11 Jan 2016

After a year of astonishing drug approvals, IPOs and M&A, the healthcare industry’s mood is noticeably less revelatory heading into this week’s JPMorgan San Francisco gathering. Inflated valuations could make it harder to persuade investors in attendance to hand over their cash.

Gene-editing IPO tests DNA of investors

5 Jan 2016

New disease-fighting techniques have captured the imagination of the medical community. A planned stock sale by Editas, backed by Google and Bill Gates, will see if financing follows. Though the market could be huge, patents are being challenged and therapies seem a decade away.

Healthcare M&A will wear down in 2016

4 Jan 2016

Obamacare and tax avoidance spurred over $550 bln of U.S. deals in 2015. That’s three times more than the previous record. With the obvious combinations already struck, acquisitive companies hurting and trustbusters sharpening their pencils, a repeat will be challenging.