Capital Calls: Amazon, Flying cars 5 Jan 2023 Concise views on global finance: The $855 billion e-commerce giant's layoffs could actually help its antitrust defense; Stellantis’s possible $150 mln investment in Archer Aviation is less crazy than it seems.
GE healthcare spinoff gets unduly glum prognosis 4 Jan 2023 The industrial giant’s newly listed MRI-to-ultrasound division flatlined on its debut as a $25 bln listed company, trading 40% below what peer valuations would suggest it’s worth. A discount plagues parent GE too. The apple hasn’t yet fallen far enough from the tree.
Weed’s next frontier is in Asia 23 Dec 2022 The cannabis market is estimated to be a $100 billion industry by 2026, but largely confined to the U.S., Canada and parts of Europe. While legalising ganja has been a slow burn in Asia, official attitudes are shifting. Demand from regional consumers will slowly light up.
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.
China’s reopening will come with big late fees 9 Dec 2022 Strict quarantine rules have helped authorities to keep money onshore, including $760 bln in travel spending. If China fully relaxes, capital outflows could be Beijing’s next headache. But the damage to outward-facing parts of the economy from keeping borders closed is worse.
Big Pharma’s heartburn win is a valuation salve 7 Dec 2022 GSK, Haleon and Sanofi’s combined worth rose $14 bln after a U.S. judge dismissed claims that a drug causes cancer. It frees up cash for new research and deals. The victory also helps lay to rest the ghost of Bayer’s Roundup legal thwack, which has haunted the sector since 2020.
Breakup is best cure for Fresenius chronic pain 6 Dec 2022 Covid-19 disruption and staff shortages have hit the $16 bln medical group, in which activist fund Elliott owns a stake. Sold separately, its various bits could better reward investors. Flogging low-hanging fruit like hospital builder Vamed would earn CEO Michael Sen a first win.
China’s Covid pivot may be damned by faint praise 5 Dec 2022 President Xi Jinping told EU officials that recent virus variants are less lethal, green-lighting more quarantine relaxation and inspiring markets. The next step is persuading households that hoarded $1.9 trln this year to spend or invest it. That won’t be easy or quick.
China needs a Covid target more than a GDP target 2 Dec 2022 After a wave of protests, officials are preparing citizens to live with the virus. Beijing has plenty of economic goals, quotas and deadlines but no published plan for epidemiological transition. There are many templates. What’s key is picking one, and sticking to it.
China’s messy options for ending zero-Covid 1 Dec 2022 Protests broke out across the People’s Republic this week as authorities tightened lockdowns to contain the virus. In this Viewsroom podcast, Breakingviews columnists discuss the difficulties of walking back a policy that leader Xi Jinping has convinced the country is necessary.
Big Pharma will muscle in on obesity gold rush 28 Nov 2022 Novo Nordisk and Eli Lilly’s weight loss drugs are swelling their valuations, and give them a lead in a potentially $50 bln market. Yet rivals like Pfizer are not far behind, and others can snap up biotechs like Altimmune. An increasingly crowded sector may lead to lower returns.
China Covid ills go from bad to chronically worse 28 Nov 2022 Nationwide protests will pressure Beijing to ease strict lockdowns. Yet officials have dragged their feet for the past two years: some 27 mln elderly are unjabbed and they face a shortage of hospital beds. These failures are quickly narrowing China’s reopening options.
Capital Calls: Roche’s risky big drug bets 14 Nov 2022 Concise views on global finance: Shares in the Swiss drugmaker fell 4% after a treatment for dementia produced disappointing results in a late-stage trial, reminding investors of the downsides of pursuing potential blockbusters.
Philips’ supply shock will haunt earnings season 12 Oct 2022 The medical-kit maker lost more than 7% of its value after saying chip shortages curbed sales. It’s a setback for the ailing group’s turnaround under new CEO Roy Jakobs. For automotive and manufacturing companies, it’s a sign that supply bottlenecks may last longer than hoped.
Hong Kong’s opening leaves it long way from normal 23 Sep 2022 The city will no longer quarantine arrivals. It may lure Wall Street bosses to a key banking summit. But with China's mainland unlikely to reciprocate access, Hong Kong will go on struggling. Its recessionary status is leader John Lee’s best hope of winning more relaxations.
Eli Lilly obesity cure creates valuation problem 21 Sep 2022 The pharmaceutical firm's weight loss drug could rake in as much as $75 bln annually if everything goes perfectly. America’s thick waistline desperately needs help. But even with generous assumptions, the company is pushing valuation limits. Plus governments will limit success.
U.S. drug price cap hurts Big Pharma twice over 15 Sep 2022 President Biden’s plan to curb medicine bills could cost drugmakers like Pfizer or GSK $29 bln a year in lost sales. To cope, companies may focus on blockbuster therapies, and shun niche treatments. More competition in hot areas like cancer may mean lower prices and poor returns.
Aussie dealmakers face embarrassment of ditches 13 Sep 2022 KKR’s $14 bln Ramsay pursuit is on life support. Toll-road owner Atlas Arteria’s top investor may go activist over its $2 bln purchase of Chicago Skyway. And a UK watchdog may scupper Link’s takeover saga. Fears of value destruction are jeopardising deals once seen as sure bets.
China’s test kit stock bubble loses air 2 Sep 2022 Officials have tested citizens for Covid-19 nearly 12 billion times, blowing up sales at firms like Daan Gene, where profit popped 130% in the first half. But rising capacity, price caps and payment delays are making investors anxious. This corporate welfare party is winding down.
KKR’s $14 bln Aussie deal is not quite deceased 26 Aug 2022 A consortium led by the U.S. private equity firm has made two offers for Ramsey Health Care. One has been rescinded by the buyers, the other rejected by the target, putting any deal in limbo. Yet both sides can still reach an agreement, provided KKR further opens its wallet.