Consolidation is a practical solution when the competitive squeeze gets put on an industry, and large pharmaceutical companies are predictably falling into the acquisitive suitor role in an effort to solve their woes, despite their quarry’s occasional reluctance to fall into line.
Prescription drugmaker King Pharmaceuticals has made public its $1.4 billion offer to purchase rival pain medication maker Alpharma. Though Alpharma has apparently rejected King’s proposal several times this summer, King is relentlessly bringing its offer into the limelight in an attempt to rally shareholder support for the deal.
Two other hostile takeover attempts have surfaced this summer — Roche’s bid for Genentech and BMS’ bid for ImClone. All three target companies — Alpharma, Genentech, and ImClone — have taken the role of the coy maiden, rejecting their suitors’ initial proposals but hinting that they may be available if the wooing is increased.
Despite Genentech’s initial rejection of Roche’s bid, the company is obviously looking for a higher offer and has outlined a new retention plan for its employees to ease tensions over the merger speculation. ImClone has stated that BMS’ offer is undervalued and is hemming over its pursual of other options. In the most recent case, Alpharma has stated that King’s offer is not in its best interest but that it would look at a higher proposal.
The synergies in this case are clear — King Pharmaceuticals and Alpharma have similar abuse-resistant pain medications up for FDA approval, as well as other compatible substances on the market and under development. King is likely hoping to head off future competition, in addition to solidifying its current operations, by buying Alpharma outright.
Alpharma has taken the tone of refusal over the deal, but with the Genentech and ImClone deals still up in the air, one has to wonder if Alpharma is also playing hard-to-get. In all three cases, there is a real possibility that the suitors could become more agressive in their takeover attempts, despite the receiving companies’ wishes. There is also the possibility that new acquisitive gents will step onto the scene.
Comments
Nikki Says:
August 27th, 2008 at 11:40 am
King needs to leave Alpharma alone. If the shareholders are smart, they’ll stay away from this deal. Alpharma shows a lot of promise and has done very well launching both Flector and Kadian. Once the NDA goes through for their new drug, it will no doubt launch just as well. Flector sells have beat forecasts and continue to rise and do better than expected. King is afraid of the competition and their drugs, while rivals, aren’t supreme to Alpharma’s. What about the workforce as well? King just laid off 1/3 of their sales force last year! They’ll buy Alpharma, strip it of its value, and leave the employees in the unemployment line. If shareholders are smart, and we are, we will hold on to our stock in anticipation of the increase in stock price as Alpharma continues to grow.
Mike Says:
August 27th, 2008 at 5:12 pm
Alpharma leadership team is a joke. Flector sales have slowed down significantly and the patch has limited upside at best-will never get close to lidoderm patch. Nikki, it is a true boutique product-average person can not afford it($200 for a 2 week supply)-very little mco coverage. Kadian has seen its day-4% market share last 3 years. Do you really feel Alpharma gives a crap about their sales force. Come on, who is fooling who, sh are only worried about their investment.
Leave a Comment