Empower your pharmaceutical business to close more deals for pharmaceutical

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[Music] the big news this morning is all happening in the pharmaceutical sector where narus Glo Smith Klein and Eli Lily have announced a series of deals and asset swaps that will reshape all three businesses around the sector Hester plumridge joins me to discuss what's going on Hester talk us through exactly who's bought what who's selling what because this is slightly complicated it is slightly complicated uh the main player in this situation is nartis which is seeking to uh buy a cancer drug business and sell its consumer health Animal Health and vaccines businesses um so Glo Smith CLI will acquire the vaccines business uh Eli Lily will acquire the animal health business nadas gets some Cancer drugs from Glo Smith Klein and the consumer health businesses of Glo and neatus combin in one big business which will be a new joint venture right so I mean this has been driven by nartist who have said in the past that they want to focus on on areas where they are big they can compete globally and so that's going to be Innovative Pharmaceuticals iare and generics they're getting rid of these three SC subscale businesses I mean does this look like a good outcome for them doing it in this way to be honest yeah this looks like a a pretty a pretty good outcome for them yes uh essentially they announced a strategic review last year saying that they wanted to get rid of these three subscale businesses uh which they built up under the previous chairman and essentially they managed to uh achieved all that in the space of one day which nobody had quite expected so they're achieving an awful lot with with one set of deals and similarly for Glo which is probably the other complicated bit of this they're achieving an awful loss on one day as well talk us through what exactly this does for them how it reshapes their business so Glo uh have already a very large vaccines business uh they are now going to become the world leader in vaccines via a clear margin um they will also build this new consumer business which Glo is going to be the main party in so in vaccines and consumer health which is drugs that you can get over the counter like cold uh treatments they will be very big in those two areas and also for Glo this gets them out of uh Cancer drugs which is an area that they've been in the past but it's a very very small part of their business and probably again subscale not worth them being in slightly surprising though because oncology is the hot area across the pharmaceutical sector nowadays and I know there have been some questions about you know why why Glo wants to get out of this at this time but more broadly is this the start of another wave of farmer deal making you know big deals across the sector or do you see this as a very sort of specific set of transactions it's interesting because there have been a lot of uh bid speculations and uh just yesterday I think um Valiant and uh an activist in investor bacman have signed up to uh uh for a deal there are kind of broader um factors behind this a lot of the pharmaceutical companies did Big deals in the sort of early 2000s they've paid down that debt now they have a lot of cash and also I think the uh pressure on drug prices in developed markets is also playing into this there are some cost pressures for them so it makes sense of pharmaceutical companies to to get bigger to cut costs and one way of doing that and in this particular set of deals everyone's getting bigger but very specific in the areas they consider themselves strongest so galao in vaccines neatus in oncology and obviously Eli Lily in the US we shouldn't forget is is going to be the second biggest player in Animal Health yeah so it is a slightly complicated but quite interesting set of transactions and all these companies become more specialist more focused and and that's the way they want to go interesting thanks for joining me thank you