Replies to post #226437 on Innovation Pharmaceuticals Inc (IPIX)

[kfcyahoo]

"Big Pharma's Strategy Is Music to Biotech Investors' Ears

Big Pharma bosses say they are willing to invest for the long run. That means high prices for promising biotech stocks aren't likely to fall any time soon."

Perhaps some BP's, not all. Article out today quoted Pfizer CEO

"Both Mr. Read and Chief Financial Officer Frank D'Amelio downplayed the possibility of finding growth by splitting up the company or doing a major deal, moves for which they had previously expressed more support.

"I don't see we need a transformative deal," Mr. Read said during the call. "The best investment we have now is in our own pipeline."

https://ih.advfn.com/p.php?pid=nmona&article=77311883

Read is Phizer's CEO.

All I know is ipix performance is not the sound of music. More like fingernails on a chalk board.

[farrell90]

Big Pharma’s Strategy Is Music to Biotech Investors’ Ears
Drug makers’ new patient approach to deal-making means biotech investors stand to benefit
Merck prefers deals that boost the company’s pipeline to a large, ‘transformational’ deal, according to CEO Kenneth Frazier.
Merck prefers deals that boost the company’s pipeline to a large, ‘transformational’ deal, according to CEO Kenneth Frazier. Photo: Mario Tama/Getty Images
By Charley Grant
May 1, 2018 12:22 p.m. ET
0 COMMENTS

Big Pharma bosses say they are willing to invest for the long run. That means high prices for promising biotech stocks aren’t likely to fall any time soon.

Merck MRK -2.63% CEO Kenneth Frazier said on Tuesday that the company would prefer deals that boost the company’s pipeline to a large, “transformational” deal, such as a merger of equals. Pfizer PFE -3.96% CEO Ian Read also said Tuesday that he doesn’t see an attractive large-scale deal at current prices.

Buying a company with many products already on the market has the advantage of boosting sales and usually earnings in the short term while offering potential cost savings. But taking a longer view makes more sense as a deal strategy these days.

For starters, investors are unenthusiastic about large pharmaceutical mergers right now. Takeda’s shares have languished since announcing its interest in acquiring the rare-disease specialist Shire back in March. That deal’s price tag will top $60 billion if it closes successfully.
Long GameMerck's Keytruda salesSource: FactSet
.billion2015’16’17’180.000.250.500.751.001.251.50$1.75

Developing a strong pipeline of potential new drugs is the most important job for any management team in the drug business. After all, the current jewel in Merck’s portfolio, cancer drug Keytruda, originally was developed by a smaller company more than a decade ago.

First quarter sales of Keytruda were just shy of $1.5 billion, or about 15% of Merck’s quarterly revenue. Keytruda sales more than doubled from a year earlier.

Finding the next Keytruda won’t be cheap. Novartis bought rare-disease startup AveXis for nearly $9 billion last month. Drug giants Celgene and Gilead Sciences recently have spent billions on promising but commercially unproven cancer treatments developed by Juno Therapeutics and Kite Pharma, respectively. None of those acquired companies were generating meaningful revenue before their investors cashed in.

But easy money makes these bets logical even if these deals don’t pan out over the long term. Balance sheets are strong throughout the sector. As long as interest rates stay low, paying cash for growth potential will be a calculated risk, rather than an act of desperation.