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Pharma earnings show rising sales for first half of 2018

Several firms quell merger and acquisition expectations in calls with analysts

by Ryan Cross
August 2, 2018 | A version of this story appeared in Volume 96, Issue 32


Business is good for the pharmaceutical industry, even as President Donald J. Trump pressures drugmakers to rein in price hikes. Most big pharma companies reported an increase in sales for the first half of 2018 compared with the same period last year.

When drug companies emphasized tax cuts and repatriated cash in their earnings reports six months ago, analysts anticipated that the extra money could send firms on the hunt for mergers and acquisitions. While some companies are appending their pipelines with small, bolt-on acquisitions, others are quelling M&A expectations by focusing inward.

“I don’t believe we need such a deal to drive the growth of this company,” Pfizer CEO Ian Read said during a call with analysts to discuss results. “We’d be far better off focusing on developing our pipeline.”

Pfizer has many drug candidates in mid-to-late-stage clinical testing in oncology and immunology. The drug giant also recently invested in gene-therapy and gene-editing research through deals with Spark Therapeutics and Sangamo Therapeutics. Pfizer could see up to 30 drug approvals through 2022, 15 of which “have the potential to be blockbusters,” Read said.

Sanofi CEO Olivier Brandicourt also said his company has plenty of internal R&D to focus on. Acquisitions are “definitely not a short-term priority,” he said. The firm already spent $16 billion to buy Bioverativ and Ablynx this year, adding gene therapy and nanobodies, respectively, to its pipeline.

AbbVie CEO Rick Gonzalez said he wouldn’t be shy about a large, $20 billion to $30 billion acquisition but that “there’s nothing in the horizon right now.”

Celgene took a different stance on M&A. The company has already spent $10 billion on M&A and business development this year, Chief Financial Officer Peter N. Kellogg said. With that track record, he added, “it should be very clear that this remains our top priority.”


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