Cantillon: Little to keep pharma analysts busy in wake of Elan deal
A US bidder swoops for Elan triggering speculation that more Irish-domiciled drug companies may find themselves in the crosshairs of acquisitive foreign companies. One of those, Jazz, subsequently misses earnings expectations, albeit narrowly, but manages to advance regardless. Even by the standards of the summer silly season, this is a real peach.
The idea that US and other companies – especially in the pharmaceutical sector where Ireland is on the radar in the boardroom of every company of any size – needed the Perrigo deal to illustrate to them the advantages of Ireland’s corporate tax code is ridiculous. Ireland’s corporate tax rate is on the front page of every IDA Ireland presentation as it touts for successive generations of foreign direct investment.
As it happens, the two companies named likely to find themselves as bid targets following the Elan deal are fully aware of the taxable gains of an Irish base – both Jazz and Alkermes moved their corporate headquarters to Dublin after their respective acquisitions of Azur Pharma and Elan Drug Technologies.
Jazz, a manufacturer of niche pharmaceuticals, may have missed its target but it is seen by the market as moving in the right direction, with the company raising its full-year revenue projections and reporting strong growth in key drugs. This is likely to be far more important to long-term prospects than becoming a mini-me for Elan. In any case, Elan’s circumstances were very particular. By its own actions, it effectively put itself in the shop window only to object when Royalty Pharma moved in to acquire it. Fending off those unwelcome advances cost Elan money it had planned to use elsewhere. More importantly, it weakened its position to such an extent it ultimately had no choice but to seek a buyer – but had the good sense to haggle for a decent price.
It would be nice to think a more serious question in the sector delivers some answers today when Amarin announces second-quarter figures, but the likelihood is supporters of the prescription grade Omega-3 fish oil drug will find themselves little the wiser about the firm’s prospects.