Monday, August 22, 2016

Explaining The Price Ian C. Read Just Paid For Medivation...

Eye-watering. That's how much cream -- or premium -- is in this price.

But as I said last night, Mr. Read simply had to play defense here. He could not let any of the other majors get these assets. Even if the Medivation pipeline doesn't pan out -- he had to keep the candidates out of the hands of the rivals Merck, BMS and Roche in particular. Why? On the chance that the Medivation pipeline does perform.

If these were to become next gen oncology blockbusters -- in the others' hands -- Pfizer would be relegated to the back of the bus, for yet another decade -- in oncology. So he is overpaying (in my opinion) -- to play lock-out defense. Here's Tracy Staton on it:

. . . .But at $14 billion, Pfizer is paying a huge premium. At $81.50 per share, the price beats analyst estimates of a "best-case" deal for Medivation. It's a 30% premium to Friday's closing price--and a stunning 180% more than Medivation's stock price when the deal talk first emerged, as Bernstein analyst Tim Anderson pointed out in a Monday investor note. "This is a hefty bid," Anderson said. . . .

The pharma world is a place where history doesn't exactly repeat, but it sure does. . . rhyme. And the rest of the world is a surreal, strange, new and wonderfully familiar place this cloudless morning. . . smile.

1 comment:

Anonymous said...

Agree with your analysis.