Inside the world of business
Who will win in State v Quinn?
THE AMOUNT of money borrowed by Seán Quinn and his family from Anglo Irish Bank, which has not been repaid, is equal to more than two-thirds of the amount the Government will try to cut from its deficit in the upcoming Budget.
Quinn’s reckless gamble on the Anglo share price at the height of the property bubble contributed to the bank’s demise and added significantly to the cost of its collapse to the Irish exchequer.
In that very real sense, there is a direct line between the businessman’s actions and the tax hikes and cuts in transfer payments that people across the State will suffer in the coming years.
For Quinn to issue a statement yesterday then, condemning the Irish Bank Resolution Corporation (IBRC) – formerly Anglo – for not having due regard to the need to guard the public purse, is pretty astonishing.
It is worth recalling that the Quinn family are involved in court actions across Europe aimed at preventing the IBRC, and therefore the State, getting its hands on properties worth more than €500 million – properties the bank says were pledged against loans given to the family and the Quinn Group.
Some of the evidence emerging about what is happening with these properties is disturbing, to put it mildly, and there is every possibility the bank will fail in its efforts to seize them, while still being left with the associated, unpaid loans.
The seriousness of the issue is reflected in the fact that Taoiseach Enda Kenny and Tánaiste Eamon Gilmore have both become involved, with the Taoiseach raising the matter with the president of Ukraine, Viktor Yanukovych, and the Irish embassy in Moscow apparently raising the matter with the authorities there.
Quinn is less than impressed, and yesterday described the alleged initiatives as an abuse of public office. It’s clear there is an almighty clash going on between the State and the man who at one stage was thought to be its richest business figure.
Who will win?
Collapse of IL&P sale may yet be a godsend
THE COLLAPSE of the sale of Irish Life and Permanent (IL&P) to Canada Life’s parent Great West Lifeco may not be the disaster it appears.
The first point to note is that it will not result in any direct additional cost to the State as IL&P will hit its €4 billion capital rasing target despite the sale falling through as it has already received €2.7 billion from the State and raised another €1.3 billion through liability management and freeing up life company reserves, according to Glas Securities.
What the State will miss out on however is the proceeds of the sale, which would have significantly reduced the net cost to the State and been a nice fillip for the exchequer.
Secondly, the deal was not without its flaws.
As was the case with the sale of a significant stake in Bank of Ireland to blue-chip North American investors, it would have represented a vote of confidence in a restructured Irish financial system and the economy generally. But it would probably also have spelled the end of IL&P as we know it, with most of the high end functions and jobs transferred to other parts of the Great West Lifeco organisation.
The worst case scenario would be that ILP ended up as little more than a distribution and processing network for Canada Life products.
That fate seems to have been avoided for the time being.
It remains to be seen if the under bidder – a private equity consortium including JC Flowers, Apollo Capital Management, and CVC Capital Partners – is still interested.
They would seem to hold out a far greater potential for the organic development of the business as they can be expected to try to grow it from its Irish base.
That said, they would probably have few qualms about flipping the business to the likes of Canada Life or others if the price was right.
End of patents mark challenge for Pfizer
IT’S BEEN the largest selling prescription drug in history, an €81 billion goldmine that had a positive spin-off for Ireland where the drug’s active ingredient was produced by Pfizer, boosting our export figures. But, from Wednesday, Lipitor faces a very different future.
The world’s most successful cholesterol drug comes off patent tomorrow, opening the market to generics and dramatically reducing the company’s projected revenue from a drug which made it the industry kingpin.
In an attempt to hold onto some of the $10.7 billion in sales the drug made last year, Pfizer has decided to continue producing Lipitor in both a branded and generic version. Although prices will fall sharply, Credit Suisse analyst Catherine Arnold estimates it could still generate sales of $3.8 billion next year, a figure that would still rank it among Pfizer’s best-selling products.
It’s a first for the US giant but, if successful, could chart a path for a number of other big pharma companies facing patent cliffs – including Sanofi with blood thinning drug Plavix – the third largest selling drug on the market, which loses protection next year.
Pfizer’s Irish operation won’t feel the full force of the change immediately as Lipitor retains patent protection here until next May, but the company’s attempts to prepare for the inevitable by putting its Loughbeg tablet plant on the market have failed to attract suitors and up to 225 jobs are likely to be lost over the coming year.
It’s gearing up to be a very different future for the group which has also put its animal health and nutritionals businesses on the block.
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