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Breakingviews: Big Pharma, Small M&A Returns

Monday, Apr 21, 2014 - 02:51

April 21 - Rob Cox and Robert Cyran discuss why Pfizer shareholders may come to appreciate AstraZeneca’s reported refusal of a $101 billion bid from the U.S. drugs giant.

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So the Easter Bunny left a bit of an -- according to the Sunday Times -- considering. A 100 billion dollar acquisition of AstraZeneca and ask -- AstraZeneca refused. But -- you have a view which is that Pfizer should do these -- -- mega mergers don't work very well at all I've had three huge deals last decade and all of them is the same thing it's like. While this great pipeline company as the cold drug savings investors love them and they cut out costs that you haven't won marketing sales team and it's going to be great company and it doesn't work because. Things with lapses is they tend to work better and smaller when he would get gigantic company it's very hard to discover drugs in the bigger the company -- drugs -- discovered. Right and if you look at the stock performance Pfizer's stock when it was doing on acquisitions and stock at this look at I'm big companies like it was Pharmacia Upjohn link we're talking -- deals sixty billion right -- -- billions that are. The stock was -- half of the words investors lost about half their investment during this period. Since 2000 shareholder returns were -- as they were. Building empire exactly -- looked as if there would be good but in reality it was they were they were -- there are putting up these numbers he's. These giant synergy numbers things like that that sort of corporate finance map. Worked when they're announcing deals but in the end it but the problem was -- their -- kept on losing patent protection and and sales start -- -- had to do another big deal to make opted to restock the -- again. It didn't work. Since 2010 they started actually shrinking and they come doesn't and had a news media and the green green and running it. And -- done what they have done some deals about why he you know that works the people who work for him yeah okay they've done they've done couple -- they spun off their animal health unit -- -- -- date they sold their nutrition business for twenty billion -- to counsel to business to private equity. What they've done is basically the leafs made company's smallest on the stocks actually double about almost doubled since then and if you throw in the animal health business which they gave shareholders shares in this company. It's an even better so so the argument is that the apartment doesn't accidentally showed that they argue one could make it. That Ian -- came in harvested. All of that all of what his predecessors have done to -- deals yet now he needs steals the mini me yes Seneca. He can perform the same magic maybe that's just think yet the only problem is that if if you look AstraZeneca is sales the sales decline of -- on looks looks. Pretty bad right that in the main drug their brains get all excited I was a drug actually Pfizer gave to them as a cancer drug. So if you if you're buying company based on the drug that you gave to him because you -- interest today that that's probably not a good. Right you get a snack while it was accurate the worship -- We'll keep an eye on that story and more we're back with more opportunities tomorrow.

Breakingviews: Big Pharma, Small M&A Returns

Monday, Apr 21, 2014 - 02:51

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