Footsie Pharmaceutical Day

PUBLISHED: Apr 22 2014 @ 09:19 | Comments (0) | More info about Lou Gutheil

The usual, quiet, long Easter weekend has passed and the markets have opened to a roar from the pharmaceutical sector that one would expect to accompany the announcement of a new drug that both cures cancer and encourages erections that last more than four hours. Let’s identify the companies first, then try to sort it all out. In no particular order, the market is in a buzz because of news from AstraZenica (LSE:AZN), GlaxoSmithKline (LSE:GSK), Pfizer (NYSE:PFE), Novartis (SIX:NOVN), and Eli Lilly (NYSE:LLY).

AstraZenica & Pfizer

Right now if you’re thinking, “That’s old news,” you would be right. But it is also new news. It’s been several months since AZN rebuffed a £60 billion offer from Pfizer. Speculation began to resurrect over the weekend on rumors that Pfizer is returning with an offer equivalent to 6,000 per share, a price that is more than attractive. It is mind-blowing compared to AZN’s share price of 3,780 at close on Thursday. AZN shares have risen sharply in trading to 4,029, indicating that more than a few believe the news is probably accurate.

A merger of these two giants would be the largest M&A transaction in which a foreign-based business acquired a UK entity. Many observers believe the deal would be a good fit, but there might be a bit of a sticky wicket when it comes to resolving issues like currently competing products like Crestor and Lipitor. For now, it’s only speculation, but, much like one of Pfizer’s most popular drugs, it is making the market stand up and take notice.

Eli Lilly & Novartis

Eli Lilly announced today that it would be spending $5.4 billion to acquire Novartis Animal Health, thereby creating the world’s second-largest animal health company. The deal is expected to take about 12 months to close.

Jeff Simmons, Senior VP of Eli Lilly said that, “Combining these two great companies will enable us to provide more diversified brands, reach more market segments, expand our global footprint, and strengthen our pipeline, capabilities and expertise. Best of all, it will enable [us] to better fulfill our important mission of enriching people’s lives through safe, nutritious, affordable food and healthier pets. And that directly supports Lilly’s mission to make life better for people around the world.”

Novartis & GlaxoSmithKline

It feels like the entire sector is swirling around Novartis. Along with selling it animal health business, Novartis is swapping selected assets with GSK.

Novartis will spend $14.5 billion to acquire the oncology division of GSK.
Glaxo will spend $5.25 billion to acquire the vaccine division of Novartis.
The companies will combine their consumer products divisions “under Glaxo’s management.”

GSK share price was up nearly 5% today on the LSE, as the company narrows its focus on respiratory, HIV, vaccines and consumer product. GSK is already the world’s largest provider of vaccines.

Is everyone clear?

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