Pharmaceuticals

Icahn’s late start blunts Cigna blocking campaign

7 Aug 2018

The activist makes a good case for rejecting the insurer’s $52 bln Express Scripts deal. Yet his argument - Cigna is paying too much for a target threatened by regulation and Amazon - was evident months ago. And the window for enlisting other arbs to his side has already closed.

GSK can do without distraction of a breakup

25 Jul 2018

Boss Emma Walmsley plans to cut costs and invest more in research. It’s a neat riposte to critics who reckon the sprawling drugs and consumer group should split itself up. Such a move would be risky and may not create much value. She still has time to prove the naysayers wrong.

Lilly cashes in on four-legged premium

24 Jul 2018

The drug company is following Pfizer’s lead and floating its animal-health business. Investors are clamoring for the steady growth that rising pet spending brings, which could value the unit at $20 bln. This opportunistic move is just the prescription to boost Lilly’s returns.

Pfizer’s drug-price rollback is a placebo

11 Jul 2018

Agreeing to freeze the price of treatments takes the U.S. firm out of the president’s unpleasant spotlight, but an increase may still be enacted by the end of the year. The sector’s opacity and complexity means posted prices have only a vague relationship to what consumers pay.

Weed wafts gently into investors’ portfolios

6 Jul 2018

Investors are warming to the devil’s lettuce. The action is mostly in Canada, which has over $25 bln of listed cannabis stocks, and rising volumes of M&A. But the U.S. is positioned to provide the metaphorical pickaxes, and big consumer brands will be watching for legal changes.

Recordati take-under is painful reality check

2 Jul 2018

CVC is buying 52 pct of the Italian pharma group for 3 bln euros, a valuation 18 pct below the market price. A share rally following the death of patriarch Giovanni Recordati did not match growth prospects. Minority shareholders must now decide whether to hold out for more.

Amazon starts pharmacy war with carpet bombing

28 Jun 2018

Walgreens’ CEO isn’t “particularly worried” about Amazon buying online drugstore PillPack. But the deal prompted investors to lop some $30 billion off the value of drugstore chains, distributors and insurers. Consumers will happily fuel the fight over the sector’s fat margins.

CVC’s Italian pharma foray could prompt a headache

28 Jun 2018

The buyout firm is in talks to acquire rare diseases player Recordati, worth 7 bln euro on the market. The group’s profit margins and international presence are appealing. But CVC may need to load on too much debt to secure decent returns.

Buffett and pals pick good medic for U.S. tapeworm

20 Jun 2018

Berkshire Hathaway, Amazon and JPMorgan chose Atul Gawande to lead their fight against rising medical bills. The surgeon has written extensively on how the system rewards excess, but not outcomes. Changing this focus would be a good start, even if neither easy nor sufficient.

Bayer M&A magic beans are cheaper but less fertile

4 Jun 2018

The German group’s acquisition of seed-maker Monsanto finally won regulators’ approval. The lengthy antitrust process and disposals mean Bayer is paying $3 bln less than expected and raising less equity. But it won't be able to cut as many costs, and the return is still sparse.

Biggest U.S. drugs face a competitive reckoning

24 May 2018

Seven of the ten best-selling U.S. drugs, including arthritis therapy Humira, have lost their main patent or will soon do so. Rivals hoping to duplicate these so-called biologics face a thicket of legal and market curbs. But a determined FDA may soon slash a path to lower prices.

U.S. drug-price plan needs more bully, less pulpit

14 May 2018

Donald Trump wants to cut the cost of pills. His approach targets flush middlemen, Medicare’s limited negotiating ability, murky pricing and the inevitable foreign boogeymen. Yet calls for self-regulation have led sector investors to sigh with relief. He’ll have to get tougher.

Hardy Indian hospital auction takes sickly turn

11 May 2018

A divided Fortis board chose selling a minority stake to two investors with little experience running hospitals over four other offers, including a $1.3 bln takeover. Half the directors may be gone before shareholders vote. The disarray leaves room for a hostile bid.

Supply-chain efficiency carries a cost

9 May 2018

Ford, ZTE and Mylan are suffering as subcontractors can’t provide sufficient parts for pickup trucks, mobile phones, and allergy pens. Economies of scale, lean inventories and specialization raise returns to capital – and make companies more vulnerable to disruption.

Debt is harder to erase than Valeant’s name

8 May 2018

The drugmaker that fell from grace in 2015 says it has turned over a new leaf. It’s renaming itself, touting a return to organic growth and reducing borrowing. Behind the gloss and a raft of footnotes, though, is $25 bln of net debt atop a $7 bln firm with declining prospects.

Takeda swallows big dose of risk to buy Shire

8 May 2018

The Japanese drugmaker finally reached a deal to buy its Irish peer, for $62 bln. Takeda can just about make the deal math work with $1.4 bln of annual cost savings. It requires big cuts to R&D, however, and operating with excessive debt for a while. That's a dangerous mix.

China’s Ping An peacocks for its tech feathers

30 Apr 2018

The finance giant has raised over $1 bln in an IPO of its medical arm, says IFR, and three more spinoffs are in the works. Ping An wants to be seen as a tech titan, not a lumbering insurer. That’s a stretch but showing off its new economy divisions is a smart and valuable move.

Once-bitten merger arbitrageurs are twice Shire

27 Apr 2018

The $62 bln Takeda bid should in theory be an attractive hedge-fund plaything. A yawning gap between the offer value and the target's share price suggests otherwise. Multiple currencies and time zones act as deterrents. So too do the scars from Shire's deal with AbbVie.

Takeda’s stretch for Shire lets rivals limber up

25 Apr 2018

The Japanese drugmaker's fifth proposal for its Irish rival sweetens the bid to some $64 bln. The headline value, which uses a huge pile of stock for currency, is falling fast as Takeda shareholders recoil. That creates an opening for other suitors who can offer more hard cash.

Takeda pushes its globetrotting ambitions too far

23 Apr 2018

The Japanese drugmaker led by a French CEO added cash to a slightly sweeter $60 bln bid for Irish rival Shire. Takeda's target is cheap, but the big premium will be hard to justify. The deal also would flood the market with shares and ratchet up debt. It's all a big stretch.