Sector News

AstraZeneca mulls £7bn move for Medivation

April 18, 2016
Life sciences

AstraZeneca is mulling a £7bn offer for the US drug company Medivation after it rejected a bid from a French rival.

San Francisco-based Medivation, which has a best-selling prostate cancer treatment, has been on the radar of AstraZeneca and its rivals Roche and Sanofi as they look for ways to boost their oncology businesses.

Medivation’s board is understood to have rejected a hostile approach from Sanofi last week but the Paris-based company may still be plotting another offer.

Medivation, which is valued at $8.7bn (£6bn) recently hired advisers at Wall Street bank JP Morgan to help defend itself from an unwanted takeover.

Sources have suggested an approach by AstraZeneca, first reported by the Sunday Times, would be questionable as the UK drug giant has previously avoided bidding wars.

Reports of its interest in Medivation could also spook investors after chief executive Pascal Soriot at the start of the year ruled out further large deals unless they could instantly boost earnings.

However, Mr Soriot has spent the last four years investing in AstraZeneca’s cancer drug pipeline in an attempt to diversify the company.

The British company faces declining sales of its cholesterol drug Crestor and industry experts have said that Medivation is now considered “in play” following Sanofi’s approach.

AstraZeneca, which itself fended off a £69bn takeover attempt by Pfizer in 2014, has recently sealed a series of deals to bring in new treatments including the $2.7bn takeover of ZS Pharma late last year.

Its own heart disease drug, Brilinta, suffered a major setback last month when it failed to show sufficient benefits for use on stroke patients.

Mr Soriot is under pressure from investors to fulfill his promise of doubling revenues by 2020 and lift the UK drugmaker’s share price to the same level Pfizer offered two years ago.

He will also face criticism at a shareholder meeting later this month for failing to link his pay to the ambitious targets he made when rejecting the takeover from the US drug company.

The American pharmaceuticals industry has since faced a series of political controversies over pricing and tax avoidance.

Medivation recently came under attack from politicians who want it to lower the cost of its treatment for its prostate cancer drug Xtandi as it was developed using public grants, for instance.

Presidential contender Bernie Sanders and 11 other members of Congress have called for the price of treatment, more than $129,000 in the US, to be reduced. Prostate cancer affects around one in seven men, according to the American Cancer Society.

AstraZeneca and Medivation declined to comment.

By Ashley Armstrong

Source: The Telegraph

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