Healthcare

Healthcare M&A pumped after Obamacare booster shot

2 Jul 2015

The U.S. top court decision upholding medical-coverage subsidies signals the official start of a race to consolidate. Centene and Health Net’s $6.3 bln deal gives the insurers an early lead. Big rivals like Cigna may catch up as the industry accepts that reform is here to stay.

Winners’ bets get bolder in the biotech casino

30 Jun 2015

Celgene is paying a 100 pct premium for a 10 pct slice of two-and-a-half year-old Juno Therapeutics. That sounds bonkers, even for a fast-moving technology like immune cell modification. The sector is on a streak, but the risk of crapping out in drug development remains high.

Supreme Court tells Obamacare opponents to move on

25 Jun 2015

The top U.S. court upheld subsidies for health coverage bought on federal markets. The president’s landmark reform is popular and, now, entrenched enough to survive. Even if Republicans win the White House in 2016, they need to stop wasting time on the issue and start governing.

Anthem can afford to raise its premium for Cigna

22 Jun 2015

The $54 bln bid puts an extra $12 bln onto the value of its rival’s equity. Cigna is playing hard to get for good reason, though. The possibility of other suitors gives its defense validity. Cost savings and the implied return on investment also suggest Anthem has wiggle room.

Mega-rejections signal M&A’s Taylor Swift moment

22 Jun 2015

U.S. health insurer Cigna brushed off a $54 bln takeover bid from Anthem while pipeline operator Williams spurned Energy Transfer’s $53 bln approach. Meantime, the 25-year-old pop idol forced Apple to pay up for music. In a hot market like this, love won’t be unrequited forever.

Health insurer M&A is risky Obamacare side effect

15 Jun 2015

Cigna rebuffed Anthem’s $45 bln offer while mulling a $32 bln bid for Humana. The urge to merge is a predictable attempt to boost profit after the controversial law clamped down on premiums. With only five big insurers, though, any deals will get a thorough antitrust checkup.

Biotech bonanza foils Big Pharma schmuck insurance

11 Jun 2015

Six months after GlaxoSmithKline sold a compound for $5 mln to a hedge fund manager, he has taken it public and landed a $3 bln valuation. It shouldn’t prevent unloved lab discoveries from being licensed. The Axovant IPO just suggests the deal structures could be smarter.

Shire can justify $19 bln price tag for Actelion

8 Jun 2015

Dublin-based drugmaker Shire is pondering a $19 bln bid for Swiss peer Actelion, media reports say. The speculation pushed shares in the potential target up 9 pct. Possible cost synergies underpin the implied 21 pct premium, but a higher markup would quickly become a stretch. 

CVS-Omnicare portends lower doses of pharmacy M&A

21 May 2015

The drugstore giant’s $10 bln purchase of the pharma services firm gives it entrance to nursing homes and expands specialty medicine distribution. But the increasingly concentrated industry is already raising antitrust concerns. The era of frantic mergers may be nearing an end.

TPG’s $8 bln drug sale far from generic

18 May 2015

With the sale of Par Pharmaceutical, a maker of off-brand medicines, the buyout firm will generate an eight-fold return on its investment in three years. Though it’s a rare development, the eagerness of buyers like Endo International means more sellers are bound to benefit.

Fitbit IPO flaunts refreshing financial health

8 May 2015

The maker of wearable fitness trackers marks a rare Silicon Valley stock sale with strong profit alongside fast sales growth. Fitbit’s founders also exhibit an uncommon focus. A dual-class share structure runs with the crowd, however, and Apple is just now sprinting in this race.   

Glaxo smartly bucks the breakup trend

6 May 2015

The British drugmaker scrapped a flotation of its HIV unit and slashed a planned cash return. That’s unfashionable in an era of spinoffs and shareholder payouts. GlaxoSmithKline, though, needs diversity and financial firepower while it tends to the core pharmaceutical business.

Alexion puts high stock to good use in biotech bid

6 May 2015

The drugmaker’s $8.4 bln offer for rival Synageva includes a whopping 136 pct premium. The stonking price is based on the rare disease specialist’s view that the market underestimates its target’s value. Exchanging a chunk of pricey paper for the assets may be a savvy move.

Pharma Arbageddon fears keep traders on sidelines

27 Apr 2015

Teva is after Mylan, which wants Perrigo. Such multibillion-dollar hostile deals are usually catnip for M&A punters. Recent failures have made them skittish, though. And these two battles come with cross-border complexity, antitrust and a poison pill. No wonder arbs are wary.

AstraZeneca’s reliance on one-offs is unsettling

24 Apr 2015

The pharma group managed to beat expectations in Q1 despite wrestling with patent expiries. One-off disposals of $309 million helped boost operating profit to $1.8 billion. Raising funds makes sense at a time when Astra is challenged, but investors shouldn’t rely on them.

Actelion’s pay spat reflects tech myopia

17 Apr 2015

A Citigroup analyst has questioned Actelion’s exclusion of stock options from its chosen earnings measure. The Swiss biotech firm may be an outlier in Europe, but custom-made earnings are common in U.S. tech and biotech companies where valuation is more art than science.

Alibaba health hype needs dose of financial logic

15 Apr 2015

The e-commerce group will transfer its small online pharmacy unit to a listed affiliate for $2.5 bln in shares. The unit’s market value promptly soared 65 pct. Becoming Alibaba’s sole online health vehicle is valuable. But the financials of the deal don’t justify the excitement.

Mylan’s $29 bln Perrigo play may keep suitor away

8 Apr 2015

The specialty drugmaker joined pharma’s deal frenzy with an unsolicited bid for its Irish-based rival. An over $3 bln rise in Mylan’s share price reflects more than possibly juicy synergies, though. It suggests the firm’s a target – and eager for a dose of takeover prevention.

$12.8 bln prescription may clear up pharmacy M&A

30 Mar 2015

UnitedHealth should generate savings worth more than the 27 pct premium it’s paying for drug middleman Catamaran. But United is playing catch-up. And its target is usually a buyer. Catamaran’s capitulation indicates benefits managers no longer need a dose of dealmaking.

Novo Nordisk can stay on Glaxo’s level

27 Mar 2015

The Danish drugmaker’s shares jumped 10 pct on hopes of drug approval. That puts its market cap above $140 bln: firmly in pharma’s big league and now well above GlaxoSmithKline. Novo’s much higher earnings multiple is deserved, given its inventiveness and focus on diabetes.