AstraZeneca leads the way in drugmaker jump
Drug sector M&A has already totalled $48bn this year, adding to the $154bn in 2014, and has been delivering an average premium of 74 per cent to three-month share prices, Credit Suisse data show.
Optimism about a key study of AstraZeneca’s Brilinta blood thinner, due for publication on Saturday, also helped the stock. AstraZeneca said in January that the study, known as PEGASUS, showed a statistically significant reduction in mortality with no unexpected safety issues.
Positive data “should be a major driver for treatment duration and thus should finally unlock Brilinta’s multibillion-dollar potential”, said UBS. It estimated that Brilinta could generate sales of up to $5.5bn in 2020, around three times consensus expectations.
“We believe [AstraZeneca] has the best pipeline in Europe, especially relative to its size,” said UBS. “Whilst a large part of the pipeline remains at a relatively early stage, there are eight late-stage blockbuster opportunities with critical milestones in the coming 18 months, which have a blue sky 2023 sales potential of more than $25bn.”
AstraZeneca added 4.1 per cent to £44.79. Shire took on 2.7 per cent to £54.55, in spite of trading ex a 12.5p dividend, and Hikma Pharmaceuticals rose 5 per cent to £23.55.
Smith & Nephew gained 1.9 per cent to £11.41. A report that the merger of Zimmer and Biomet is nearing EU approval helped revive talk of further sector consolidation, such as a Johnson & Johnson bid for S&N.
Sinclair IS Pharma, which has been in tie-up talks since November with peers rumoured to include Almirall of Spain, rose 2.1 per cent to 37p.
Still recovering from Tuesday’s sharp sell-off, the FTSE 100 gained 39.56 points, or 0.6 per cent, to 6,761,07.
Aggregates maker CRH bounced 3.7 per cent to £18.07. News that Holcim and Lafarge have begun talks to redraft the terms of their merger agreement helped bolster confidence that CRH will complete its side deal to buy forced disposals from the union.
Brewer SABMiller took on 1.7 per cent to £36.33 on another M&A reheat.
“Now is arguably the best time for AB InBev to finance a bid on SAB, courtesy of bond and foreign exchange markets,” said Exane.
“Despite limited synergies and execution risk, a deal would boost earnings per share and more importantly, help solve Inbev’s volume issue. Tempting. If a deal doesn’t happen soon, it may never happen.”
Sector peer Diageo rose 1.8 per cent to £18.82 with Morgan Stanley putting a £22 target on the Smirnoff maker.
Soco International slumped 34.4 per cent to 158.6p after cutting reserve estimates for its flagship Vietnam oilfield by 70 per cent.
TSB rose 23.5 per cent to 326.1p after the bank received a 340p bid from Banco Sabadell. Virgin Money, widely seen as the most likely counterbidder, added 1.9 per cent to 369.5p.