Healthcare

AstraZeneca’s M&A flurry clears value hurdle

17 Dec 2015

The UK pharma group has spent $4 bln on a stake in cancer specialist Acerta. Its acquisitions this quarter now total more than $7 bln. The dealmaking reflects new-drug pipeline challenges and sector-wide price pressure. Astra is ratcheting up the risk, but the approach looks sound.

Valeant has a pricing problem

16 Dec 2015

The $40 bln drug maker has a new distributor: U.S. pharmacy chain Walgreens. But a reduced revenue forecast for the fourth quarter suggests Valeant is cutting prices. The $30 bln of debt from its recent acquisitive past helps give insurers and other buyers an advantage.

Sanofi and Boehringer scratch each others’ backs

15 Dec 2015

The French pharma group is swapping its animal health business for the consumer arm of the German company. The 23 billion euro deal helps both while avoiding the risk of expensive M&A. Boehringer may have a marginally better deal, but Sanofi’s need is probably greater. 

Valeant poised to cause much collateral damage

7 Dec 2015

The acquisitive drugmaker’s travails have vaporized fortunes, damaged reputations and dusted the sector with political radioactivity. Indirect effects could be even larger. Valeant will take its toll on so-called platform companies, “adjusted” accounting and hedge funds broadly.

Delay in Pfizer split is material adverse event

24 Nov 2015

The $160 bln acquisition of Allergan will cut taxes and add solid assets, but it’s also causing Pfizer to defer until 2018 a decision on splitting up. Even though the company’s disposals have added greater value than acquisitions, CEO Ian Read seems more eager to bulk up.

Pfizer’s $150 bln plan is high-risk, low-benefit

19 Nov 2015

Buying Allergan would give the drug giant a low-tax domicile in Ireland and one good drug, Botox. At the reported price, Allergan would accrue nearly all of the obvious upside. Pfizer would be left with a possible integration hangover – and tax savings that might disappear.

Heads won’t roll at Mylan despite blunders

13 Nov 2015

Rather than take a $40 bln-plus offer from Teva, the drug firm pursued Perrigo, whose owners rejected the bid on Friday. The vote was partly against Mylan’s poor governance – which also makes it unusually hard for its own shareholders to turf out inept executives and directors.

Valeant CEO gets called on $100 mln excess

6 Nov 2015

Paying bosses in equity nudges them to serve shareholder interests. The pharma giant went to extremes, allowing chief Michael Pearson to borrow heavily against his shares. The tumbling stock forced him to repay the debt - an example of how skewed incentives have rocked Valeant.

Shire pays up for easier prey than Baxalta

2 Nov 2015

The UK pharma group is offering $6 bln for rare-disease drugmaker Dyax while biding its time for an eventual swoop on Baxalta. The deal relies on bold assumptions and could take years to pay off. Shire is good at M&A, but a weak share price shows market support can’t be assumed.

Merger Monday has a scary Halloween afterglow

2 Nov 2015

At least six corporate buyers unmasked acquisitions of $1 bln or more to sustain the freakish pace of M&A. Some of them, including Visa’s, are tricky, while others like Shire’s treat sellers to rich prices. The zombie-like deal march is causing investors to take fright.

Ackman’s Valeant defense nervy but unpersuasive

30 Oct 2015

The hedge fund founder says the drug firm is a victim of bad PR, naive investors and jealous rivals. He even likened his stake to Warren Buffett’s savvy investment in lenders cheated by a 1960s salad-oil scandal. The reality is Valeant is flawed in ways a “pep talk” won’t fix.

Testing simplifier Theranos complicates governance

29 Oct 2015

The Silicon Valley blood-analysis firm, ostensibly worth $9 bln or more, trimmed its director ranks, formerly packed with wise men from the U.S. government and military. But now it has sprouted three boards. That contrasts with the clarity Theranos seeks for hematology.

Pfizer may pay dearly for Allergan tax-lite charms

29 Oct 2015

The U.S. drugs group is eyeing a $330 bln tie-up with its Ireland-based rival, reports suggest. Allergan, with an enviably low tax rate, can hold out for a good price. But if Pfizer stumps up for a premium of more than 25 percent, it will risk paying away the benefits of a deal. 

No simple cures for Gilead and Apple valuations

28 Oct 2015

Like the iPhone maker, the biotech is the best in its industry and churns out hefty profit. Yet its stock trades at a big discount to the market. Investor impatience for astonishing new products - and fears that neither company will find them - borders on the irrational.

Investors coax Walgreens Boots to swallow Rite Aid

27 Oct 2015

Scooping up the No. 3 U.S. drug chain strengthens $98 bln Walgreens as it battles domestic leader CVS. Antitrust is an obvious question given the rough ride Staples has faced with Office Depot, but the hurdles look manageable. Shareholders are certainly not worried.

How Theranos Hoovered up $9 bln of influence

27 Oct 2015

CEO Elizabeth Holmes persuaded a clutch of bigwigs like George Shultz to join her board, tapping the roster at Stanford’s world-improving think tank. Theranos’ headline valuation shot skywards. But the wise old men don’t seem to be helping now that things are looking shaky.

Valeant’s clarification efforts further tangle web

26 Oct 2015

The acquisitive pharmaceutical company’s attempt to explain ties to drug distributors failed to clear things up. Analysts didn’t ask – and a 90-page presentation and call with investors didn’t answer – why it obscured the dealings. The messy details also confirm some fears.

Double Pac-Man healthcare M&A contains triple risk

20 Oct 2015

AmSurg wants to be king of U.S. doctor outsourcing. The $3.8 bln firm made an unsolicited $5.3 bln offer for TeamHealth while also backing its target’s agreed purchase of another company for $1.4 bln. The double gulp raises the odds of overpaying, buying a dog, or poor execution.

Blood test casts doubt on unicorn valuations

15 Oct 2015

The promise of faster, easier blood diagnostics allowed Theranos to raise money at a $9 bln price tag. The details of the firm’s technology have never been clear and have now been called into question by a WSJ report. It’s easier for questionable valuations to thrive in private.

J&J buyback a sensible regimen for ailing stock

13 Oct 2015

The pills-to-Band-Aids group will use debt to repurchase $10 bln of shares, adding to a healthy dividend. CEO Alex Gorsky can credibly argue that currency swings and a full but slow drug pipeline make the stock underpriced. It’s the rare case when juicing its value is justified.