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Roche & Alexion M&A Simulation

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Aurore Cassin
Aurore Cassin

Travaux dirig辿s de simulation de vente d'Alexion Roche. Cours de M&A de M. Pierre CASANOVA l'I.A.E. d'Aix-en-Provence.

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Martin Alnes Aurore Cassin Daria Chebatarova Indra Pratama Qiong Qi
STRENGTHS WEAKNESSES 1. 81,735 employees present in 108 countries 2. The 2 divisions (Pharmaceuticals and Diagnostics) add up to their efficiency in decision-making process by working under one command. 3. It is one of the worlds leading supplier of cancer medicines and the number one in vitro diagnostics company (20% share) 4. Innovation through a focus on R&D (23% of employees) on pharmaceuticals and diagnostics. 5. Focused on value strategy (i.e. oncology products) rather than on volume strategy. 6. By acquiring American biotech company Genentech and Japanese company Chugai pharm, Tucson, Ventana, exclusive marketing possibilities for the products have arisen. 1. Some drugs that are patent to Roche are massively produced in developed countries and are not efficiently distributed in the third world countries (like in the case of Tamiflu), thus licensing is not fairly utilized. 2. Imitation of products, e.g. fake medicines supplied under brands name affect the brand. OPPORTUNITIES THREATS 1. Strategic agreements with other pharmaceutical companies and organizations to develop its research as well as significant budget setting for R&D 2. Global penetration through mergers and acquisitions 3. Growth in demand for quality healthcare solutions 1. Risk of unsuccessful launch of new products 2. Regulatory environment is becoming more severe 3. Competitors, incl. Siemens, Abbott, Sanofi who are developing too.
Strengths Consistent Financial Performance Strong Patent Base Lead Product Soliris Wide Geographical Presence Weaknesses Involvement in Legal Proceedings Third Party Dependency For Vial Filling Opportunitie s Pipeline Products & deals Inorganic Growth Strategies Demographic Trends Orphan Drugs designation Emerging Markets Threats Stringent Government Regulations Uncertainties in R&D (Competitive Pressures)
2007 2008 2009 2010 2011E 2012E Revenu e $72.041 Million $259.09 9 Million $386.8 Million $540.95 7 Million $775.3 Million $1 Billion Net Income -$92.29 Million $33.149 Million $295.16 6 Million* $97.030 Million N/A N/A EPS -$2.54 $0.39 $3.26* $1.04 $1.30 $1.67 Revenu N/A 259.65 e % Growth 49.29% 39.85% 43.32% 28.98% EPS Growth N/A N/A 735.90 % -68.1% 25% 28.46% Net Cash - $87.288 Million -$1.511 Million $166.30 2 Million $357.88 7 Million $444.47 Million (Q3 2011) N/A Alexion will finance Enobia with cash and $300 million of debt. Even if it seems as a big warning sign on the surface, it isnt so. Alexion has good cash flows. The stock trades at over 98x trailing earnings, and 61x forward earnings. Few companies are growing as fast as Alexion is, and Soliris is approved for new treatments, and new therapies are released, growth will accerlerate from here.
Alexion bough Taligen to gain rights to their experimental ophthalmology drug for the treatment of Age related muscular degeneration Alexion bought Enobia to gain rights to investigative treatment for HPP (hypophosphatasia)
If Alexion or their third-party providers, including their product vialers, packagers and labelers, fail to compluy full with regulations, Government-enforced shutdown of production facilities Product shortages
On January 26, 2011 Novartis Vaccines & Diagnostics Inc filed a civil action against Alexion Claims willful infringement by Alexion of U.S. Patent Novartis seeks monetary damages.
Conduct additional studies Failure to comply with the laws Approval for Soliris Administrative sanctions Interruption of production
Revenue Enhancement Commercial rights on existing orphan drugs, Soliris, in 40 Countries for Paroxysmal Nocturnal Hemoglobinuria (PNH) treatment & in US and EU for Atypical Hemolytic Uremic Syndrome (aHUS) Potential treatments using Soliris for another 8 severe & ultra-rare diseases beyond PNH & aHUS Patents on new & existing orphan drugs; Soliris, Asfotase Alfa, cPMP Replacement Therapy, ALXN 1102/ALXN 1103, ALXN 1007
Cost Savings Using Roches existing global distribution network. Administrative cost reduction Alexions SG&A for 2011: USD 308.18 million Synergy will provide additional value (assuming WACC of 8.12% & growth rate of 3.00%) : . ロロ . % . % = , . ロロ

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Roche & Alexion M&A Simulation

  • 1. Martin Alnes Aurore Cassin Daria Chebatarova Indra Pratama Qiong Qi
  • 2. STRENGTHS WEAKNESSES 1. 81,735 employees present in 108 countries 2. The 2 divisions (Pharmaceuticals and Diagnostics) add up to their efficiency in decision-making process by working under one command. 3. It is one of the worlds leading supplier of cancer medicines and the number one in vitro diagnostics company (20% share) 4. Innovation through a focus on R&D (23% of employees) on pharmaceuticals and diagnostics. 5. Focused on value strategy (i.e. oncology products) rather than on volume strategy. 6. By acquiring American biotech company Genentech and Japanese company Chugai pharm, Tucson, Ventana, exclusive marketing possibilities for the products have arisen. 1. Some drugs that are patent to Roche are massively produced in developed countries and are not efficiently distributed in the third world countries (like in the case of Tamiflu), thus licensing is not fairly utilized. 2. Imitation of products, e.g. fake medicines supplied under brands name affect the brand. OPPORTUNITIES THREATS 1. Strategic agreements with other pharmaceutical companies and organizations to develop its research as well as significant budget setting for R&D 2. Global penetration through mergers and acquisitions 3. Growth in demand for quality healthcare solutions 1. Risk of unsuccessful launch of new products 2. Regulatory environment is becoming more severe 3. Competitors, incl. Siemens, Abbott, Sanofi who are developing too.
  • 3. Strengths Consistent Financial Performance Strong Patent Base Lead Product Soliris Wide Geographical Presence Weaknesses Involvement in Legal Proceedings Third Party Dependency For Vial Filling Opportunitie s Pipeline Products & deals Inorganic Growth Strategies Demographic Trends Orphan Drugs designation Emerging Markets Threats Stringent Government Regulations Uncertainties in R&D (Competitive Pressures)
  • 4. 2007 2008 2009 2010 2011E 2012E Revenu e $72.041 Million $259.09 9 Million $386.8 Million $540.95 7 Million $775.3 Million $1 Billion Net Income -$92.29 Million $33.149 Million $295.16 6 Million* $97.030 Million N/A N/A EPS -$2.54 $0.39 $3.26* $1.04 $1.30 $1.67 Revenu N/A 259.65 e % Growth 49.29% 39.85% 43.32% 28.98% EPS Growth N/A N/A 735.90 % -68.1% 25% 28.46% Net Cash - $87.288 Million -$1.511 Million $166.30 2 Million $357.88 7 Million $444.47 Million (Q3 2011) N/A Alexion will finance Enobia with cash and $300 million of debt. Even if it seems as a big warning sign on the surface, it isnt so. Alexion has good cash flows. The stock trades at over 98x trailing earnings, and 61x forward earnings. Few companies are growing as fast as Alexion is, and Soliris is approved for new treatments, and new therapies are released, growth will accerlerate from here.
  • 5. Alexion bough Taligen to gain rights to their experimental ophthalmology drug for the treatment of Age related muscular degeneration Alexion bought Enobia to gain rights to investigative treatment for HPP (hypophosphatasia)
  • 6. If Alexion or their third-party providers, including their product vialers, packagers and labelers, fail to compluy full with regulations, Government-enforced shutdown of production facilities Product shortages
  • 7. On January 26, 2011 Novartis Vaccines & Diagnostics Inc filed a civil action against Alexion Claims willful infringement by Alexion of U.S. Patent Novartis seeks monetary damages.
  • 8. Conduct additional studies Failure to comply with the laws Approval for Soliris Administrative sanctions Interruption of production
  • 9. Revenue Enhancement Commercial rights on existing orphan drugs, Soliris, in 40 Countries for Paroxysmal Nocturnal Hemoglobinuria (PNH) treatment & in US and EU for Atypical Hemolytic Uremic Syndrome (aHUS) Potential treatments using Soliris for another 8 severe & ultra-rare diseases beyond PNH & aHUS Patents on new & existing orphan drugs; Soliris, Asfotase Alfa, cPMP Replacement Therapy, ALXN 1102/ALXN 1103, ALXN 1007
  • 10. Cost Savings Using Roches existing global distribution network. Administrative cost reduction Alexions SG&A for 2011: USD 308.18 million Synergy will provide additional value (assuming WACC of 8.12% & growth rate of 3.00%) : . ロロ . % . % = , . ロロ