Healthcare Pulse: Mallinckrodt PLC (MNK), Pfizer Inc. (PFE), and Horizon Pharma PLC (HZNP)
Mallinckrodt PLC (NYSE:MNK) is hoping that a $500 million boost to its stock buyback program will help shield the company’s stock from falling further. However, it faces scrutiny on a massive price increase on one of its drugs.
The larger industry has suffered a great deal ever since Citron Research called out against pricing policies and marketing efforts in the industry. A price hike of 2,000% on Synacthen a drug that treats a dangerous form of epilepsy is already the subject of investigations by prosecutors in the US.
Mallinckrodt PLC (NYSE:MNK) maintains that the drug was underpriced in Canada. Even after the massive price increase the company says the drug will still remain unprofitable. Ever since Citron called out Mallinckrodt’s as one of the biggest offender on price hikes, its stock has shed more than 16% in market value. According to the research firm the drug maker has more downside potential than Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which has shed more than 50% in market value.
Pfizer Inc. (NYSE:PFE) is inching closer to its most expensive takeover having reportedly made a $380 a share takeover offer for Botox maker Allergan PLC (NYSE:AGN). The deal, however, continues to elicit concerns on the Street on suggestions that the US Treasury is looking to pass tighter guidelines on inversions.
What Pfizer needs at the moment are fast growing products to replace its fading blockbusters? That may not come from Allergan, which only has a few of those drugs. Allergan sales growth also looks less impressive at the moment. As it stands, the deal will only make financial sense if the long-term play is to leverage Ireland’s lower corporate tax rate.
The fact that the deal won’t be accretive to Pfizer’s earnings until 2018 could also arouse further concerns on the Street. Pfizer Inc. (NYSE:PFE) needs to capitalize on the benefits of Ireland’s low tax regime if it is to generate any value from Allergan PLC (NYSE:AGN) in the years to come. That is, however, dependent on the kind of changes that Treasury has in mind as it moves to crack the whip on inversions.
Horizon Pharma PLC (NASDAQ:HZNP) has withdrawn its proposed $1 billion unsolicited offer for Depomed Inc (NASDAQ:DEPO). The withdrawal follows a court ruling that stated the bid was based on improper use of confidential information. The ruling ends a six-month pursuit that faced stiff resistance from Depomed’s Board.
Disappointed by the ruling, Horizon confirms that Depomed’s was one among many attractive companies it was pursuing. Satisfied with the ruling, Depomed, on the other hand, maintains that it will continue to focus on its commercialization strategy while operating as an independent company.
Depomed Inc (NASDAQ:DEPO)’s board repeatedly turned down Horizon Pharma PLC (NASDAQ:HZNP)’s advances maintaining they were not in the best interest of a company that was in a period of rapid growth. The company is currently banking its future on the acquisition of US rights to painkiller Nucynta acquired from Jansen Pharmaceuticals.
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