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Replies to post #186326 on Biotech Values
In early January Brenton “Brent” Saunders, the chief executive of upstart pharmaceutical giant Actavis , reclined in a medical chair on a stage in an Orlando hotel ballroom as a plastic surgeon pierced his face 30 times, delivering needles full of Botox to the crooks of his eyes and nose and injecting Juvederm Voluma, a dermal filler, into his cheeks. A cameraman documented every prick and projected it on a huge screen behind him. These are bestselling products for Allergan AGN +0.62%, which Actavis is buying for $67 billion, the biggest health care deal in six years. The audience, 1,000 Allergan sales reps, went wild.
“I don’t have any crow’s feet anymore, and I don’t have any wrinkle lines above my nose,” says Saunders, who was boyish-looking even before his face was shot up with treatments. “Now I can say I’m not just the CEO, I’m a user.”
He’s also, at just 44, the hottest executive in the global pharmaceutical business and, at least for now, the undisputed deal king of Wall Street. Five years ago Saunders had never been a CEO. Now he has run three major drug companies and sold two, generating $25 billion for his public shareholders and investors such as private equity firm Warburg Pincus. In the last year alone he did deals worth $97 billion. Actavis, a generic-drug maker, was the white knight that saved Allergan from a bitter hostile takeover attempt by rival pharmaceutical company Valeant and activist investor William Ackman. The combined Actavis-Allergan will be the world’s tenth-biggest drug firm, with 30,000 employees and, despite being unprofitable, $8 billion in free cash flow on revenues of $23 billion.
Saunders insists that Actavis-Allergan is more than just a short-term trade. It’s the springboard for a revolutionary new kind of drug company: “growth pharma,” he calls it. Actavis-Allergan will have the scale in marketing and clinical trials of a global powerhouse like Eli Lilly or Bristol-Myers Squibb, but it will eschew the core mission of most drug companies–inventing drugs–preferring to buy them from universities or biotechs all the time. The new company will be the first big pharma that doesn’t even pretend to invent medicines.
“ The idea that to play in the big leagues you have to do drug discovery is really a fallacy,” says Saunders. “You have to do research, you have to be committed to innovation. I strongly believe that, but discovery has not returned its cost of capital.”
09/17/15 5:22 PM
AI
