Pharmaceuticals

Capital Calls: BP, Japanese M&A

2 May 2023

Concise views on global finance: The oil giant will buy back $1.8 bln of shares over the next three months, which is less than investors hoped for; Astellas Pharma is making the most of cheap debt for its $5.9 bln pounce on U.S. eye-treatment specialist Iveric Bio.

Capital Calls: Exxon, US regional banks

28 Apr 2023

Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.

Capital Calls: US GDP, Eli Lilly, EU budget

27 Apr 2023

Concise views on global finance: Consumer spending provided fragile support for the US economy in the first quarter. Meanwhile pharma group Eli Lilly is racing against rising obesity expectations, and the European Commission faces German hurdles to replacing its budget rules.

J&J carves itself up at a discount

24 Apr 2023

The healthcare giant is floating part of its Listerine-to-Tylenol business with a mooted price of $40 bln, a 20% discount to rival Haleon. Litigation risk and an inhospitable market may leave J&J with a valuation wound in need of a Band-Aid. For investors, it’s worth the risk.

Icahn may fall short in quest of the holy Grail

21 Apr 2023

New rules in proxy contests haven’t helped activists in Disney or Salesforce. But with a concentrated shareholder base, they may embolden Carl Icahn as he agitates at Illumina, in the process of buying cancer detector Grail. The trouble is Icahn is pushing beyond the attainable.

Big Pharma risks overdosing on M&A

19 Apr 2023

Drugmakers including Pfizer and Sanofi have started 2023 with $65 bln of U.S. deals, a 50% jump from the decade average. A big reason is that heavyweight payer Medicare can negotiate price cuts from 2026. The rush to plug revenue gaps will lead to much misallocated capital.

J&J’s sweetened talc settlement still unsettling

4 Apr 2023

The healthcare giant’s attempt to limit legal claims to a unit that declared bankruptcy was shot down by courts. It’s trying again with a $7 bln bigger pot and more plaintiffs on board. That may appease the aggrieved. But bypassing jurors sets a bad precedent.

Bigger and louder choirs create M&A dissonance

29 Mar 2023

After Ritchie Bros struck its $7 bln deal to buy IAA, at least 10 shareholders, including Starboard and lesser-known Discerene, sang out about the transaction. Uncommon and first-time vocalists are on the rise. Expect bosses and boards to develop their own new song and dance.

Icahn reacts audaciously to Illumina’s audacity

14 Mar 2023

The mouthy billionaire wants three board seats at the $36 bln biotech company and for it to spin off Grail. Boss Francis deSouza overpaid to buy back the cancer detection business and took on too much regulatory risk. Some oversight is warranted, but a 1% stake only buys so much.

Capital Calls: Eli Lilly

1 Mar 2023

Concise views on global finance: The drugmaker is reducing the list price on its insulins by 70%. Problem is, few actually pay anything close to the sticker price. Insurers will probably prefer to use insulins from rivals, assuming they can keep negotiating big discounts.

Cancer drug sale would be high hop on hope

27 Feb 2023

Pfizer is sizing up oncology specialist Seagen after talks with Merck stalled last year. While Big Pharma needs therapies to sell, the probable price of $40 bln or so is a big barrier. At that level a buyer would earn perhaps a 2% return on investment, even with hefty savings.

Returning pharma CEO has one prescription: M&A

16 Feb 2023

Brent Saunders ran three major drugmakers, and ultimately sold them all – one of them twice. He’s back in the corner office at $7 bln Bausch + Lomb again. The company’s earlier wheeling and dealing complicates matters, but history suggests finding a new owner is a likely outcome.

Capital Calls: U.S. jobs, Crypto data-miners

3 Feb 2023

Concise views on global finance: Rapid hiring in America has bad and worse consequences; blockchain analytics company Chainalysis is cutting staff, but those tracking crypto crimes, including governments, could use more of its services.

Liberated GSK is still searching for booster shot

1 Feb 2023

The $72 bln drugmaker spun off its consumer unit last year to focus on prescription medicines. But it now trades at a discount to European rivals. To close the gap, CEO Emma Walmsley needs to deliver new drugs, fend off Pfizer’s respiratory vaccine, and prove her M&A skills.

Pfizer goes back to the pharma meat-grinder

31 Jan 2023

Its warning that revenue will fall by one-third this year is a return to pre-pandemic doldrums, where pharma companies wrestled with the meager, declining returns of developing new drugs. The best shot for Pfizer and peers is to focus new technology on hard-to-treat diseases.

UK reaches limits of drug penny-pinching

19 Jan 2023

AbbVie and Eli Lilly pulled out of Britain’s pharmaceutical pricing agreement, due to shrinking returns. The UK’s single health service helps it play hardball with Big Pharma. Yet drug research is collapsing, hurting jobs and citizens’ health. There’s a case for spending more.

Bayer’s rude health lays better path for breakup

11 Jan 2023

Activists including Jeff Ubben are piling into the $58 bln German seed and drug maker. Its cheap share price, thanks to the dire Monsanto deal, has for years dangled the promise of a lucrative carve-up. Improvements in the pharma unit and a CEO change make it more likely now.

Capital Calls: AstraZeneca

9 Jan 2023

Concise views on global finance: The drug giant is to pay up to $1.8 bln for U.S. group CinCor Pharma to beef up its kidney and heart businesses.

J&J breaks with legal and valuation uncertainty

5 Jan 2023

The $470 bln healthcare giant is jettisoning brands like Listerine and Band-Aid while also putting liabilities related to Tylenol into the new group. The fluctuating valuation of a similar GSK spinoff last year shows the difficulty in valuing potential court settlements.

Flu-remedy shortages sap investor misperceptions

21 Dec 2022

Drugmaker GSK spun off $35 bln Haleon in July with legal issues, high debt and low expectations, but strong demand for children’s Advil and other medicines are providing a salve. Similar splits in media, oil and tech have defied the odds, too. Contrarian bets can be therapeutic.