Sector News

Pfizer/AZ chase may be off as pharma deals falter

October 20, 2014
Life sciences
At the start of the year, it looked like the pharmaceuticals mergers and acquisitions (M&A) market would get an adrenaline injection – but now, it looks more like it’s taken a sleeping pill.
 
Until the AbbVie board announced that it was reconsidering what seemed to be a done deal to acquire Ireland-listed specialty pharma company Shire late Tuesday, many bankers and investors in the pharma sector had believed that recent U.S. Treasury rule changes targeted at “tax inversions” wouldn’t affect deals already in the pipeline. That belief now seems naïve.
 
Tax inversions involve a company taking over another which is headquartered in a different country, but moving its headquarters there for tax purposes, to use overseas cash which would be taxed twice if it was brought back to the U.S.
 
The potential for a Pfizer-AstraZeneca mega-merger also looks diminished, with sources close to the situation saying the chances of a new $116 billion plus bid at the end of November, when Pfizer can submit a new bid under U.K. Takeover Panel rules, have lessened. This would have been the biggest ever acquisition in the sector.
 
“We’ve had a real shock to boardrooms in terms of their confidence about whether they want to do a deal in the last week,” Scott Moeller, director of the M&A research centre at Cass Business School, told CNBC.
 
“This (the Shire-AbbVie deal) is clearly a win for the Treasury department, and it’s going to put a lot of cold water on the tax inversion market. We might not see other companies doing the same thing.”
 
Deals worth $590.9 billion have been pulled this year, which is shaping up to be the worst year for withdrawn deals since 2008, when $640 billion worth of deals didn’t complete, according to Dealogic. Back then, the financial crisis was at its zenith, whereas this year the global economy and markets look much healthier.
 
Yet the long-term drivers for deals in the pharmaceutical sectors are still there, according to some analysts.
 
“The pharma sector remains very attractive for deals and it still needs consolidation,” Moeller said. “Roche should be poised to do some deals, some of the U.S. companies who see a strategic benefit will still want to do deals. Companies need to focus on what they see as core, and that means getting out of some of the things that aren’t so core.”
 
By Catherine Boyle
 
Source: CNBC

comments closed

Related News

October 10, 2021

Nutraceutical giants’ partnerships inject life back into industry at Vitafoods

Life sciences

Some of industry’s biggest players are joining forces to bring cost-effective yet scientifically backed offerings to the nutraceuticals market. Co-creation is reinvigorating supplement innovation, pairing together companies’ diverse expertise, sales networks and clinical trial investments.

October 10, 2021

Pilot launch complete: GlaxoSmithKline’s malaria shot scores WHO backing for wider rollout in Africa

Life sciences

GlaxoSmithKline has spent many years developing and testing its world-first malaria vaccine, but even after a positive recommendation from European regulators in 2015, the shot still isn’t widely deployed. That’s set to change with the World Health Organization’s (WHO’s) blessing for the vaccine.

October 10, 2021

Henrietta Lacks’ estate sues Thermo Fisher for continued sale of HeLa cells without family consent

Life sciences

A sample of Henrietta Lacks’ tissue was taken from her cervix without her consent while she was undergoing cancer treatment at Johns Hopkins Hospital in 1951. Her cells have subsequently been used to develop the polio vaccine, HPV vaccines and gene-mapping techniques and continue to be sold for research purposes by Thermo Fisher Scientific.

Send this to a friend