Healthcare Pulse: Pfizer Inc. (PFE), Sanofi SA (ADR) (SNY), and Gilead Sciences, Inc. (GILD)

Pfizer Inc. (NYSE:PFE) and Allergan PLC (NYSE:AGN) have come to agreement on a $150 billion merger. This would be one of the largest-ever inversion deal in the sector. The agreement comes just days after the US Treasury hinted it was working on a set of new rules to clamp down on inversion deals.

The $150 billion deal will see Allergan shareholders receiving 11.3 Pfizer shares for each share held. The deal could take seven to nine months to close with the combined company set to be split into two businesses. One of the businesses will spearhead efforts on patent-protected products with the other one focused on products that have already lost patent protection.

The announcement of the deal is sure to elicit political ire as Pfizer is to re-domicile into Ireland to escape the high tax regime in the US. Pfizer Inc. (NYSE:PFE) CEO, Ian Read, a strong critic of the US tax regime, is to lead the combined company. Allergan PLC (NYSE:AGN) CEO, Brent Saunders, on the other hand, is to assume the President and COO role.

Sanofi SA (ADR) (NYSE:SNY) has not registered the best of runs in the recent past having registered slow growth both on revenue and profits front. Its shares have also been a disappointment trailing both the S&P and the healthcare sector in general. Having bounced back from a fierce leadership dilemma marred with boardroom tensions, the French Pharma believes it is now on a path to growth.

CEO, Oliver Brandicourt, has already laid out a strategic roadmap that he says will act as the company’s playbook until 2020. Sales growth has been stagnant in the recent years, but Brandicourt reiterates they are ready to turn the page on the same.

Sanofi SA (ADR) (NYSE:SNY) is banking its future on six new drugs set to hit the markets between now and 2020. Combined with other drugs already in the market, the company expects revenues of between $13 billion and $15 billion by 2020.

The pharmaceutical company is also looking at various cost savings opportunities to help steer the bottom line in the right direction. Sanofi plans to cut its costs by $1.7 billion by 2018 through layoffs. There are also plans to expand the research and development budget by $6.5 billion by 2020.

Gilead Sciences, Inc. (NASDAQ:GILD) still has some room to run with its hepatitis C cures even on accruing $26.8 billion in sales in two years. Up until now, about 600,000 patients have gained access to Sovaldi and Harvoni, the company’s lead drugs on the disease. With the overall Hepatitis C market believed to compromise about 185 million people worldwide, opportunities for more sales are endless.

Europe is one of the key markets that Gilead has set its eye on for more sales. CEO Paul Carter has already reiterated the importance of Europe on Hepatitis C sales, in future. Country-specific budgets rather than the number of patients should pose the only headwind in pursuit of more sales in the region.

This year alone, the treatments have attracted 80,000 patients in Europe, generating nearly $3 billion in revenue. Europe has an estimated 9.3 million patients in need of such treatments of which Gilead Sciences, Inc. (NASDAQ:GILD) has only tapped a portion. In the US, Gilead has only accessed 10% of the total patients, presenting another avenue for more sales in future.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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