Pharmaceuticals

AstraZeneca’s 3 billion pound CEO is overvalued

13 Jul 2017

That is how much was wiped off the drugmaker’s market value after a website reported Chief Executive Pascal Soriot will join Teva. Any such exit would hardly inspire confidence, coming after another senior departure and before a key medical trial. But the reaction is excessive.

Cancer treatment revolution has more to prove

12 Jul 2017

Novartis’ new immunotherapy is on the way to winning U.S. approval. It appears to be startlingly effective with certain cancers. Assuming that proves out, bigger questions include how to scale up personalized medicines and whether and how society can afford to pay for them.

German takeover regime is loser from Stada saga

10 Jul 2017

Regulators blessed a slightly higher 5.3 bln euro offer for the drugmaker from Bain and Cinven. The decision frees the buyout firms from a one-year wait after a previous bid failed. Though Stada and its shareholders cheered, the victory makes German M&A less predictable.

FDA moves signal storm warning for pharma

29 Jun 2017

New commissioner Scott Gottlieb is wasting no time combating high prices. The U.S. agency will expedite reviews of generic-drug applications to promote competition. The changes will batter the likes of Valeant and Cardinal Health, and cast a cloud over branded drug makers.

Walgreens salvages mild boost from intense effort

29 Jun 2017

After antitrust pushback on acquiring the whole of Rite Aid, the U.S. drugstore is buying over 2,000 of its rival's stores for $5.2 billion. For CEO Stefano Pessina, doing about half the deal with half the benefits is something – but it's a modest return on 20 months' work.

Stada fiasco has roots in flawed German M&A rules

27 Jun 2017

Bain and Cinven’s 5.3 billion euro offer for the drugmaker collapsed despite a 49 percent premium. While the bidders may have a second go, the debacle is a lesson in how investment strategies that exploit misguided takeover rules can go terribly wrong.

Lab deal tests positive for overexcitement

20 Jun 2017

A wave of consolidation and buyouts among drug outsourcers generated plenty of bids for latest target Parexel. The prospect for cost cuts ought to have given rival companies the upper hand. Yet private-equity shop Pamplona won by offering $4.5 bln, suggesting it paid too much.

Roche faces hard climb back from cancer setback

6 Jun 2017

A trial showed combining a new drug with the Swiss group’s Herceptin gave only a slight benefit to patients. That will make it harder to protect the blockbuster’s $7 bln of revenue from generic competitors. Roche could buy back shares, or rival drugmakers. Neither is cheap.

Amazon is prescription for pharmacy woes

17 May 2017

The internet retailer has set its sights on the $300 bln business of selling drugs to U.S. customers. Regulation and delivery concerns are barriers. Yet these, and the inefficiency of U.S. healthcare, also promise lucrative earnings for a company happy with razor-thin margins.

Thermo Fisher experiment starts with pricey deal

15 May 2017

The maker of scientific instruments is paying $5.2 bln to buy Patheon, which produces drugs and the chemicals used in them. Cost savings don’t come close to covering the premium. Its quarry's industry may be ready for consolidation, but Thermo also has a lot to learn about it.

Bayer exemplifies Germany’s too-powerful boards

28 Apr 2017

A big institution is unhappy the chemicals group didn’t give it a say on its value-burning $66 bln purchase of Monsanto. German companies can do deals without putting them to a vote and often have carte blanche to raise capital. The wound is self-inflicted and possibly avoidable.

Pharma deal offers new buyout double-dip trial

27 Apr 2017

Carlyle and Hellman & Friedman are swapping stakes in drug tester PPD while increasing its paper value 2.5 times, to $9 bln. The firm’s growth may justify the valuation but shuffling buyouts is opaque and can harm returns. As fund-to-fund deals grow, this risk will loom larger.

AstraZeneca reaches point of maximum pain

27 Apr 2017

The drugmaker's revenue fell 10 percent in the first quarter, despite a boost from non-recurring sales. Losing patents has hurt Astra's pricing power. Winning approval for new drugs would help boss Pascal Soriot rebuild. Investors are not fully factoring in that possibility.

Fresenius bets $4.8 bln on post-Trump drug sector

25 Apr 2017

The German healthcare group’s bid for Akorn makes sense. The U.S. drugmaker’s high-margin business has little overlap and a full product pipeline. It is paying a 35 pct premium but Fresenius needs few synergies to meet its cost of capital. Politics may be the fly in the ointment.

JPMorgan’s $100 bln deal cash may have few takers

19 Apr 2017

The bank's global M&A boss dangled the audacious notion that capital markets could fully finance a 12-figure takeover. He didn't suggest such a transaction was in the works, though, and there aren't many plausible targets. One theoretical pairing could be J&J buying Abbott.

Cardinal sings out two more drug warnings

18 Apr 2017

The U.S. pill distributor said for the third time since October that falling prices would hurt profit. Cardinal Health underscored the hard times ahead by paying $6 bln for Medtronic's medical-supplies unit to diversify. Other links in the pharmaceuticals chain will suffer, too.

Alere discount diagnoses limits of deal desertion

17 Apr 2017

The U.S. medical-test company is selling for 9 pct less than first agreed. Buyer Abbott had threatened to walk away after Alere's billing practices and accounting came under fire. To settle such a good MAC test case suggests the M&A escape clauses are merely negotiating tools.

Pharma offers rare tonic for private equity ills

10 Apr 2017

Bain and Cinven paid 5.3 bln euros, a 49 pct premium, for drugmaker Stada. They could make a decent return managing Stada better and growing it, not just borrowing. That is exactly what private equity is for. Yet such targets are rare, and buyout firms’ war chests are brimful.

Flu exposes U.S. folly in weighing fear and risk

3 Apr 2017

Americans are 1,000 times more likely to die from this common illness than terrorism. The current, and worst, bird-flu outbreak in China means the imbalance is even higher. Washington's decision to spend so much more on homeland security than preventing disease is misguided.

Reckitt is smart to go easy on the sauce

3 Apr 2017

The UK consumer-goods group may sell the division that makes French’s mustard for around $3 bln. Cashing out would take the heat out of the company’s debt-financed $17 bln bet on Mead Johnson – even if it seems odd to sell a business that’s growing fast and highly profitable.