(Barron's) Pharma Pipeline Revives Bayer’s Fortunes


Pharma Pipeline Revives Bayer’s Fortunes

The big German life-science company is reorganizing and restructuring, with a pipeline of youthful drugs fattening margins and earnings.

Bayer shares could get a new lease on life as the company generates fatter profits across its portfolio in 2016. Its stock could perk up 25% in the year ahead as the life-sciences company wrings improving profit margins from its drug business, which has an exciting range of relatively youthful products. The shares (ticker: BAYN.Germany), which closed in Frankfurt Friday at 119.70 euros ($128.35), could climb to €152 in the next 12 months. Bayer’s American depositary receipts ( BAYRY ) were trading Friday at $127.89.

More gains would be a welcome boost after a below-par performance so far in 2015. The stock is up about 6% compared with a 10% rise in the German benchmark DAX index. With a market capitalization of about €100 billion, Bayer is the largest stock in the DAX. “It is essentially unavoidable that Bayer will trade with the index, given its diversified nature, but this should delay, not prevent, the stock from responding to the drug fundamentals,” notes Sanford C. Bernstein analyst Aaron Gal. “We view the current discount as an opportunity.”

Gal rates Bayer Outperform with a €152 price target, based on a sum-of-the-parts calculation, valuing the pharmaceutical business at 18 times estimated 2016 earnings, consumer care at 23, crop science at 18, and material science at 16. The shares trade for 15.5 times projected 2016 earnings, which is pricey compared to chemical companies such as BASF (BAS.Germany), with a 14 multiple, but cheap against pharmaceutical players such as Roche Holding (ROG.Switzerland), at more than 17.

“It looks extremely cheap,” says Kevin Kelly, who runs the Recon Capital DAX Germany(DAX) exchange-traded fund. The medical space is tough right now, but Bayer is demonstrating good execution and “their growth is tremendous,” he adds.

In January 2016, Bayer will scrap the holding-company model with operating subgroups to become an integrated organization focused on pharmaceuticals, consumer health, and crop science. That should help visibility and efficiencies. The move follows the October initial public offering of Bayer’s material-sciences unit, Covestro(1COV.Germany), a provider of high-tech polymers. Bayer pocketed about €1.5 billion from the IPO, much less than anticipated, but retains a 69% stake.

Supported by its pharma business, Bayer is expected to report earnings per share of €6.99 in 2015, up from €6.02 last year, and €7.78 in 2016. Group sales are forecast to climb from €42.24 billion last year to €46.70 billion in 2015 and €47.71 billion in 2016.

Pharma accounted for more than 25% of group sales last year. Sales are projected to grow by 6% annually, and earnings by 9%, through 2020, propelled by a portfolio that includes anticoagulant Xarelto, whose sales rose more than 75% last year, to €1.68 billion, and the eye medicine Eylea, which more than doubled sales to €759 million. Berenberg analysts estimate sales of Xeralto and Eylea will double by 2017, and forecast pharma sales of more than €19 billion in 2020, compared with around €12 billion last year. Pharma margins could reach 33% in 2016, up from 31% in 2013, which would translate to superior earnings growth.

It could get even better for shareholders, depending on what else is in Bayer’s pipeline. “If more [products] are successful, we are off to the races,” says Bernstein’s Gal. 

FT : Global oil inventory stands at record level

Global oil inventory stands at record level

Oil inventories have swelled to the highest level on record as crude producers intensify the battle for market share, putting unprecedented strain on the world’s energy infrastructure.
The International Energy Agency, the west’s oil forecaster, said stocks in developed countries had ballooned to almost 3bn barrels — the equivalent to more than a month’s supply of global oil consumption.

Even though demand has been robust this year, crude inventories have continued to rise at more than 1m barrels a day, with storage tanks filling quickly and long lines of ships forming at key ports around the world.
As a result oil prices, which have halved in the past 18 months, might fall even further to encourage refiners to process more crude and force more production offline, traders said. Brent crude, the global benchmark, fell to below $44 a barrel on Friday.
“This massive cushion has inflated even as the global oil market adjusts to $50 [a barrel] oil,” the IEA said in its monthly report.
Opec production is running above its formal output ceiling of 30m b/d as Iraq and Saudi Arabia have increased output to near record levels. At the same time, Russia is pumping oil at post Soviet era highs as it fights for customers in Europe and Asia.
Neither Opec, which meets next month in Vienna for its twice yearly ministerial meeting, nor Russia has shown any desire to cut production.
Saudi Arabia, the cartel’s de facto leader, upended the oil market a year ago after abandoning its longstanding policy of adjusting output to support prices.
Oil prices that averaged more than $100 a barrel since 2010 had led to a surge in output from high-cost rivals, such as oil from US shale fields and Canadian tar sands that threatened Riyadh’s market dominance.
Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company, told the Financial Times this week that the kingdom was determined to stick to its policy in spite of the financial pain it had inflicted on the country. “The only thing to do now is to let the market do its job,” he said.
The IEA said global oil supplies breached 97m b/d in October, 2m b/d more than a year ago, with two-thirds of the increase coming from Opec producers.
Lower prices have stimulated demand, which is rising at the fastest pace in five years as motorists enjoy cheaper fuel. But the Paris-based organisation said growth would slow next year with forecasts for a mild winter in Europe and North America also likely to impact consumption.
“If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate,” the IEA said.
The overhang in oil production that developed in the US as domestic output surged has spread across Europe and Asia. It is not just restricted to crude and also includes refined fuels such as gasoline and diesel.
Opec this week said inventories in industrial nations had only surpassed an “excessive level” of 150m b/d twice in the past 10 years.

(ZeroHedge) EU Commissioner's Dire Warning: "The Only Alternative To Europe

EU Commissioner's Dire Warning: "The Only Alternative To Europe Is War"
 

While the saying goes "good fences make good neighbors," it appears the leadership of The EU is starting to get frustrated with the lack of acquiescence among some of the 'union's' newer or more marginal members. In a somewhat stunning statement, following ongoing and contentious meetings to discuss solutions to the migrant 'problem', EU Commissioner Timmermanns appeared to warn disagreeable member states, "There is an alternative to everything. I believe in EU cooperation because of all other forms in history have been tried to help Europeans get on better, and with the exception of this one, all other forms have led to war - so let's stick to this one."

 

 

As Elsevier reports (via Google Translate),

European leaders read the last few days the alarm about the survival of the European Union (EU). Prague said Commissioner Frans Timmermans (PvdA) Friday that the EU is only one alternative: war.

 

"The only alternative to the EU is war," said Timmermans Friday gave a speech at a conference in Prague, said a reporter for The Times of London who attended the speech.

 

Timmermans is the way Europe responds to the migration crisis' the biggest threat to the EU ever. The Commissioner underlined that countries should cooperate better when it comes to border controls. "Migration is part of life, but we must lead these movements together in the right direction," said Timmermans.

 

Matching words Timmermans in the alarmist tone that European leaders were heard in recent days about the survival of the EU. Earlier this week, Timmermans at the House of Europe Lecture in Amsterdam that he fears for the survival of the EU. "I do not optimistic about doing that, because I'm just not. This is the first time in my conscious experience of European cooperation that I think: it could ever really be able beaches.

 

Luxembourg Foreign Minister, who will chair the Council of the European Union on behalf of his country, spoke in an interview about identical words.

 

The current migration crisis is the European ideal of free movement shaking on its foundations. EU President Donald Tusk said that the EU is engaged in "a race against the clock." "But we are determined to win this race," said Tusk. "As I warned earlier, the only way not to dismantle the Schengen ensure proper management of the external borders of the EU."

 

The EU appears to be unable to curb migration flows. Because the borders are not guarded, seeing more and more countries are forced to protect their own borders. Even the welcoming Sweden went on Thursday to intensive checks on the southern border.

Remember when Hank Paulson waved the "Mutual Assured Destruction" card in the face of the U.S. with his infamous "blank check" three page term sheet? Now, it's Europe's turn.

What's worse, however, for things to devolve this much, it confirms that the European 'Union' is rapidly disintegrating, much more than the recent surge in barbed wire fences around European nations will demonstrate, and as Timmermanns warns, that means war.

>>> PRGO - Confirms shareholders reject Mylan's tender offer, confirms intent to

Confirms shareholders reject Mylan's tender offer, confirms intent to repurchase $2.0B in Perrigo shares, complete $500 million of the planned repurchase by the end of 2015

Holders of a majority of its shares rejected Mylan's hostile tender offer, thereby expressing confidence in Perrigo's long-term strategy, vision, and management plans for the future. Shareholders holding over 60% of Perrigo's outstanding shares refused to tender into Mylan's inadequate offer by today's 8 A.M. ET deadline. Perrigo will immediately commence its previously announced $2 billion repurchase of Perrigo shares and plans to complete $500 million of the planned repurchase by the end of 2015.

Perrigo CEO: "We have said all along that this offer from Mylan was a bad deal for our shareholders, as it significantly undervalued our durable business model and industry-leading future growth prospects. Strong organic growth, a disciplined approach to M&A, and transparent, accessible corporate governance policies are the foundation of our successful business strategy. I am delighted that Perrigo shareholders voiced their clear support for this management team and our long-term strategy, highlighted by our 'Base Plus Plus Plus' growth model. Now that the Mylan tender offer is behind us, we look forward to continuing to create significant value for our shareholders. Our confidence in Perrigo's compelling near- and longer-term growth prospects and our steadfast commitment to delivering returns to shareholders remain unchanged."

>>> Syngenta is apparently being courted by ChemChina - Talks Continue Running

Syngenta is apparently being courted by ChemChina - Shares lay
Basel (AWP) - Just two and a half months after the canceled acquisition of Syngenta through the US competitor Monsanto's agrochemical company sources said the fall in the crosshairs of a purchase consent competitor again. According to the news agency Bloomberg said to have signaled their interest in the Chinese chemical company ChemChina. On the stock market, the share price of Syngenta responded promptly with significant impacts.
ChemChina have put in discussions an offer of 449 CHF per share on the table, Bloomberg reported on Thursday, citing people familiar with the matter. The Basel but had rejected with reference to regulatory risks. The offer price represents a premium of nearly 30% to the closing price of the Syngenta share on Thursday. Syngenta would be assessed with around CHF 41.7 billion.
TALKS CONTINUE RUNNING
Unlike the ruptured Monsanto Deal Syngenta has opened the door for ChemChina but apparently not completely slammed. The talks between Syngenta and the Chinese continued despite the rejection of the offer. An agreement could be achieved in the coming weeks, according to Bloomberg. Syngenta also speak with other interested parties. However, the negotiations could also fail and Syngenta opt for independence.
With acquisition of the state-owned ChemChina Syngenta, one of the largest chemical companies in the People's Republic, not only make the largest acquisition of a Chinese company in Europe, but also usher in a paradigm shift would. Because ChemChina is the daughter Adama now operates only as a manufacturer of generic agrochemicals. Whose patent protection has expired So as a producer of imitators for products.
Many applicants
The courting of Syngenta had unleashed industry leader Monsanto. In the summer of 2014, the Americans were approaching with a first proposal and gave after an obstinate Advertise until this summer (time being) on. Monsanto justified this with the unbroken resistance of the Swiss. The offer of the Americans have underestimated the value of the company in a significant way, Syngenta had defended its stance. Monsanto had as ChemChina per share 449 CHF commanded, however, of which 55% in shares and not in cash.
Thereafter, the M & A speculation went into the next round. This even more so after Dow Chemical announced to consider a sale of its seed and crop protection business. Even brought the "Wall Street Journal" Syngenta a week ago along with the US group DuPont. And now to be interested in as Basel also ChemChina.
Shareholders' association URGES THOROUGH EXAMINATION
On Friday announced the "critical association Syngenta shareholders" to speak out and reiterated their displeasure with the corporate strategy of the Basel agrochemical Nehms air. She asks the Board that it honors its obligations and receive calls with ChemChina. Offers rejected without having examined this thoroughly and impartially, was "unacceptable".
On the stock market the new takeover rumors have meanwhile captured the Syngenta shares: On Friday morning the tracks were in an otherwise weak market to temporarily more than 10% higher. In the afternoon climb Syngenta still by 7.0% to 370 CHF in height, whereas the overall market (SMI) loses 0.84%.
Helvea expert Markus Mayer may not quite believe the speculation principle. The fact that now ChemChina held Monsanto was the bidder, the situation does not change. Because, according to Mayer, the Monsanto-offer was rejected because of political interests - and not as Syngenta postulated due to antitrust risks.