Pharmaceuticals

Skill, luck and law drive $11 bln biotech buyout

17 Jun 2019

Array BioPharma has developed several potential blockbusters for others. But it wouldn’t be selling to Pfizer at a 62% premium without an earlier gift from antitrust regulators. A pact between two rivals sent valuable drugs Array’s way, along with cash, making it a juicy target.

China’s pharma shake-up wins healthy endorsement

11 Jun 2019

Drugmaker Hansoh is valued at $10 bln after pricing shares at the top of the range in its Hong Kong IPO, backed by high quality investors. It looks like an early beneficiary of Beijing’s radical price reforms which favour diversified giants and will knock out low-quality rivals.

For U.S. patients, knowledge isn’t power

28 May 2019

Forcing hospitals and doctors to disclose net prices to consumers, as President Trump is proposing, is a good idea. Patients can only shop around if they know what they will pay. Even so, healthcare still fails many other tests of being a competitive market.

Three reasons a wonder drug can cost $5 mln

14 May 2019

Novartis’s gene therapy for a deadly disease looks likely to set a record. There are justifiable factors, like the value it delivers and drugmakers’ high development costs. Then there are less palatable ones, including an inefficient U.S. market with a tolerance for high prices.

America’s opioid legal blitz is a smoking mess

8 Apr 2019

Overdose deaths are surging, Oklahoma won a $270 mln settlement, and a blizzard of lawsuits is bearing down on makers and distributors of the drug. It recalls the tobacco crisis that ended with a $206 bln pact. Yet proving liability and apportioning blame will be much harder.

Walgreens ails from inflation deficiency

2 Apr 2019

More than $7 bln in value bled out of the drugstore chain after it slashed earnings guidance. Prescription prices are the root cause: After years of rising, they’re now under pressure and crimping once-fat margins. Walgreens’ “most difficult quarter” won’t be the industry’s last.

AstraZeneca takes precision approach to cancer M&A

29 Mar 2019

The UK drugmaker will pay up to $6.9 bln to work with Daiichi Sankyo on a breast cancer drug. It’s a low-risk way of growing in a hot area, without the pain of an acquisition. The more than $4 bln jump in the Japanese group’s market value suggests the two are better off together.

Biogen loses same Alzheimer’s bet others have lost

21 Mar 2019

The failures of similar drugs in formal trials meant Biogen’s effort was always a long shot. Yet ditching it vaporized $18 bln, or over a quarter, of the biotech’s value. The giant market for a therapy and the fear of missing out lured in both the company and Wall Street.

Starboard’s Bristol-Myers pitch needs an activist

19 Mar 2019

Pushy investors should keep their arguments tight. Starboard’s beef with the drug company’s $74 bln deal for Celgene does highlight overpayment and patent risks. But its 197-page presentation is as bloated as its target, containing contradictions and micromanagement.

Bristol-Myers $74 bln deal needs surgery

28 Feb 2019

Big shareholder Wellington Management and activist Starboard Value have both come out against the pharma firm’s deal for Celgene. The market also isn’t pricing in the acquisition happening as Bristol-Myers envisaged. It doesn’t help that the buyer was already overpaying.

Germany’s Merck chips into aggressive M&A game

27 Feb 2019

The drugs and chemicals supplier is making a hostile $5.2 bln offer for Versum, after Barrick’s $18 bln unsolicited tilt at Newmont. Both aim to nix earlier agreed deals, while Roche is injecting $4.3 bln into new tech. Recent market wobbles have not yet dulled merger mania.

Activists turn guinea pigs in drug M&A trials

21 Feb 2019

Starboard is targeting Bristol-Myers’ board after its $74 bln Celgene deal. Appaloosa is pushing $46 bln Allergan to fix its problems or sell. They’re using standard activist tactics. But Big Pharma’s size and complexity have long provided some immunity to such attacks.

Scale is no easy remedy for CVS price pressures

20 Feb 2019

The pharmacy firm slashed its profit forecast due to a squeeze on reimbursements and slower drug-price growth, wiping $7 bln off its market value. Buying Aetna was supposed to help it cut costs and improve patient outcomes, but that’s harder than banking on healthcare inflation.

Novo Nordisk sugar rush will fade

1 Feb 2019

Strong sales of drugs to combat diabetes and obesity boosted the Danish drug company’s shares. But the rising number of users could give U.S. health providers scope to negotiate cheaper prices. The arrival of rival medicines, and expiring patents may give them leverage.

The Exchange: Big Weed’s big year

11 Jan 2019

Bruce Linton runs the world's biggest cannabis producer, Canopy Growth. He visited Breakingviews to discuss what's coming down the pipe in 2019, why a $100 bln weed company is still some way off, and why he doesn't actually partake - yet.

Temasek helps a drugstore giant flaunt its glow

10 Jan 2019

The state investor may sell part of its stake in health and beauty giant A.S. Watson. The retailer's size, moves upmarket in the mainland and growth elsewhere in Asia can justify a premium. Cashed-up buyout firms may well be tempted, helping Singapore to cash in on a $6 bln bet.

Eli Lilly’s $8 bln cancer deal is a worthy wager

7 Jan 2019

The drug giant reckons it’ll take years to get a good return on its pricey acquisition of Loxo. But the upstart has had startling success figuring out why rare cancerous mutations occur, rather than where. Longer term, that should make for plenty of targets – and sticky prices.

Morgan Stanley’s virtual mega-bank model pays off

3 Jan 2019

The Wall Street firm is funding a whopping $33.5 bln loan for Bristol-Myers’ purchase of Celgene through its decade-old alliance with Japan’s MUFG. Acting like one bank gives Morgan Stanley bragging rights and a chance to play alongside rivals with much bigger balance sheets.

Cannabis will take China tech’s path to propriety

3 Jan 2019

A subversive industry feared by the establishment, with investors reliant on legal loopholes: American pot companies are starting out much like Chinese tech giants did. In the same fashion, as this shadowy industry creates jobs and wealth, appetite for reining it in will wane.

Bristol-Myers takes $74 bln bet against the market

3 Jan 2019

There are good reasons to buy rival oncology giant Celgene. But cost cuts don’t cover the 54 pct premium and the target’s owners get the financial benefit. Bristol is hoping for luck in the courts and multiple regulatory approvals that Celgene’s shareholders were skeptical of.