Shire plc to Forest Laboratories, Inc. on Deal List for AstraZeneca PLC: Real M&A

Published: Feb 14, 2013

For AstraZeneca Plc to reverse its worst profit slide, the drugmaker needs to make its biggest purchase since at least 2007. AstraZeneca reported a 37 percent drop in 2012 earnings and forecast profit this year will decline “significantly more than revenue” after the $59 billion company suffered setbacks in developing new therapies to replace best-selling drugs that are losing patent protection. While Chief Executive Officer Pascal Soriot said he will focus on internal efforts and purchases of $3 billion to $4 billion to help boost the lowest valuations in the industry, Exane BNP Paribas said only a “transformational deal” can return the company to growth. Buying Shire Plc, an $18 billion specialty drugmaker, could help AstraZeneca fill the gap with patent-protected medicines for rare diseases and leading attention-deficit disorder therapies, Kepler Capital Markets said. Forest Laboratories Inc.’s lung treatment could bolster the company’s respiratory business, while closely held Bausch & Lomb Inc. would allow AstraZeneca to gain new revenue by branching into eye care, Kepler said. A deal for Shire or Forest would rival or top AstraZeneca’s acquisition of MedImmune Inc. for about $15 billion in 2007, according to data compiled by Bloomberg. “In order to buy time, they need to do a large acquisition,” Fabian Wenner, a Zurich-based analyst at Kepler, said in a telephone interview. “To me, that’s the only solution. People were devastated when they saw the 2013 outlook. The top and bottom line is only going one way -- down.” Deteriorating Outlook: Vanessa Rhodes, a spokeswoman for London-based AstraZeneca, declined to comment yesterday on whether the company would consider pursuing a larger acquisition. AstraZeneca’s outlook is deteriorating as it loses patent exclusivity on drugs that accounted for 40 percent of its peak revenue in 2011 of $33.6 billion.

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