Pharmaceuticals

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

20 June 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 June 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 April 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 April 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 April 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 April 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.

Shire makes needy suitors work for risky bet

19 April 2018

The London-listed pharma group has rejected a 42 bln pound offer from Osaka-based Takeda, and may now face a bid from Botox-maker Allergan. Shire’s business has its challenges, but its would-be acquirers have strategic issues and need a deal. The risk of overpaying is going up.

P&G drug deal needs vitamin shot to persuade Peltz

19 April 2018

The U.S. consumer giant is paying 3.4 bln euros for the consumer arm of Germany’s Merck. For it to make sense P&G will have to crank up sales of Seven Seas vitamins while cutting out costs. Board member Nelson Peltz’s criticism of past acquisitions further raises the stakes.

Shire cancer sale boosts weak takeover defences

16 April 2018

The $47 bln drugmaker facing a potential bid from Takeda sold its cancer treatments for $2.4 bln. Shire’s debt and doubts over its business weaken its resistance. The best bet may be to show that a Takeda offer undervalues its business. But more radical surgery could be tricky.

Bayer investors get unwelcome antitrust present

10 April 2018

The German company has struck a deal with U.S. regulators to clear its $60 billion acquisition of seed group Monsanto, the Wall Street Journal reported. After EU approval in March, a two-year saga is almost over. Bayer’s sagging stock price means shareholders can hold the cheers.

Novartis $8.7 bln splurge balances risk and growth

9 April 2018

The Swiss drugmaker paid a near 90 pct premium for AveXis, which is developing a treatment for spinal muscular atrophy, weeks after selling its consumer drugs joint venture. Experimental drugs offer faster growth than painkillers but more risk. It’s a pricey way to boost revenue.

Walmart may have hit on healthy kind of disruption

30 March 2018

Merging with insurer Humana could put clinics in the U.S. retailer’s stores, keeping patients out of hospitals and insurance costs down. Walmart isn’t given to big acquisitions and $37 bln Humana wouldn’t come cheap. But a broader partnership could bring many of the benefits.

Takeda takes a turn at Shire’s risky M&A strategy

28 March 2018

The $42 bln Japanese drugs group may bid for $45 bln takeover machine Shire. There’s not much overlap, and uncertainties hang over key businesses. But Shire is cheap, and its shareholders exasperated. That may appeal to Takeda boss Christophe Weber, but it's also a warning.

Drug companies take the anti-Amazon pill

27 March 2018

Novartis is selling its consumer health assets to GSK for $13 bln. It makes sense for the former to focus on traditional drugs given the threat from e-commerce. For the latter, the purchase is less risky than a Pfizer deal and may still allow investment in its core business.