Nice try. Novo Nordisk, looking to pep up its biopharma offering, attempted to initiate talks with Belgium’s Ablynx by going public with a takeover proposal. The target, which makes blood treatments inspired by camel proteins, rightly got the hump.
On Monday Ablynx said it had agreed a higher offer from French pharma group Sanofi. Novo Nordisk, which has historically relied upon organic growth rather than acquisitions, backed away.
The cost of drugs to treat rare but life-threatening conditions tends to be high. So too, the value of companies that develop them. Sanofi is paying €45 a share for Ablynx, whose main product treats acquired thrombotic thrombocytopenic purpura, a blood disease. Six months ago, Ablynx traded at less than €15. Sanofi is offering almost 50 per cent above Novo Nordisk’s bid, which was itself a 44 per cent premium to the Ablynx undisturbed price.
The French group, also hunting growth as existing franchises come under pressure, says returns on capital will exceed the cost of that capital within three years. It said the same of Bioverativ, a haemophilia specialist which it agreed to acquire last week. Markets appreciate the scientific and commercial logic of both deals, if not the eye-popping valuations.
Novo Nordisk, meanwhile, has less immediate need of a deal. It has had more success at managing pricing pressure by launching newer diabetes treatments. There are high hopes for its oral treatment for the condition, with trial data due out this year.
The biopharma unit, about a fifth of sales, does look sickly. If Novo wants to bulk it up, it will need to be rather less cautious than it was with Ablynx. The group has net cash of DKr18.9bn (€2.5bn) and a market value of €114bn. Its shares are richly rated. Sober Scandinavians may balk at the bets being placed by flamboyant Gallic rivals. But valuations are not about to mean-revert and, in the longer term, remaining aloof carries risks of its own.