At the J.P. Morgan Healthcare Conference, Jimenez told Bloomberg that Novartis may make some deals. But if a megamerger is the entree and a $10 billion deal the soup course, then Novartis plans to fill up on hors d'oeuvres. "I don't think we need a big acquisition in the short term," Jimenez told the news service. "You may see us do more bolt-ons ... between $2 billion and $4 billion, not more than that."
Is there a particular drug that's the holy grail of pharmaceuticals?
Everybody is trying to develop a break-through in Alzheimer's, especially because of the aging population and the burden that the disease is going to have, not just on the health system financially but also on families. Unfortunately, the brain is the most complex organ in the body, so there have not been a lot of effective therapies.
What's your overall goal?
We're seen as primarily a pharmaceutical company. My mission, over the next five years, is to move Novartis toward being a broad-based health care company.
Developing drugs takes a very long time: From discovery all the way to launch could be 10 or 12 years and cost almost $2 billion..
I don't think anyone is paying even the bottom of that range ($2 billion) for Avanir with their very small $75 million in net Nuedexta sales almost 27 months after launch of the drug in the U.S., not to mention the threat of generic competition in 2014 (although I guess Avanir will win their patent infringement lawsuits).
I think a $5 buyout offer at this point would be sufficient to buy Avanir and that is only $688 million, a far cry from $2 billion.
No one cares what you think. You assertion to a buyout price of $5/share is preposterous !!!! The only votes that count here are the votes of the board of Avanir and the path that CEO Katkin has set for Avanir. He has already stated that his intentions are to set this company as a mid cap biotech pharmaceutical company. Anything less is just preposterous!!!!
Raynoman, I'll take your assertions and say that were at $75M net sales. If you put a multiple of 5 on that number, which I think is reasonable for a small biotech, you get pretty close to our current market cap. I agree that I think a buyout from this point between 5-10 would be possible, and I would take anywhere in that range given that I have a lot of my portfolio in this stock and I'm not trying to be greedy.
But, saying we have $75M in Net Sales now, still growing at a decent clip, and now getting into the Euro market, I think we could have sales of much higher than this a year from now and therefore justify a greater buyout price. We may partner and just get a royalty %, but still, those are profits to the bottom line and would factor into a company's buyout calcs.
So, even going along with your reasonable assertions, I still see the risk/reward here as a good one given the probable patent lawsuit win, growing pill counts, and long patent protection compared to other companies/drugs.