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Health Care Roundup: Market Talk

23 Jan 2018 9:20 am

The latest Market Talks covering the Health Care sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2353 GMT - Australian Pharmaceutical Industries 1H woes may not be just a short-term blip, says Bell Potter. It lowers its FY18 earnings forecast by 7.7%, and scraps its buy call on the stock, after API says its like-for-like sales across its Priceline network of chemists fell and 1H net profit likely will be 9% lower than a year ago. "We believe there is a threat of secular decline in retail pharmacy sales," Bell Potter says downgrading its earnings forecasts for FY19 and FY20 by up to 11%. API's shares fall a further 9% Tuesday to A$1.34, trading below Bell Potter's new A$1.43/share price target. (david.winning@wsj.com; @dwinningWSJ)

2255 GMT - UBS says its Evidence Lab division interviewed 1,322 parents and pregnant women in China and mined website data to better understand trends in the market for infant formula, which has shifted towards super premium products, with safety increasing in importance for consumers, particularly in Tier 3-4 cities, the investment bank says. There is also market consolidation underway--assisted by new registration regulations--with the top 10 brands increasing share and online prices trending up in recent months. For A2, the brand remains a Top 7 brand in the online sector with around 26% of the market and has risen to being ranked number one in safety and trust among survey participants, "suggesting further pricing gains are possible". (ben.collins@wsj.com)

2121 GMT - New Zealand's NZ50 index opens 0.1% lower at 8325.93, after global markets were buoyed by US corporate earnings and US lawmakers agreed on a deal to end the brief government shutdown. Z Energy is 2.6% lower in early trade after pipeline outages and higher crude oil prices saw it lower its FY18 earnings guidance. Meanwhile, Metlifecare is up 2%. (ben.collins@wsj.com)

1752 GMT - The funding bill to reopen the federal government includes another suspension of the medical-device tax. The bill would suspend the 2.3% excise tax on sales of medical devices such as pacemakers and artificial knees for 2018 and 2019, retroactive to Jan 1, according to spokesman for industry trade group Advamed. The tax was part of the 2010 Affordable Care Act, but had been suspended for 2016 and 2017. It came back into force Jan. 1, but device makers including Becton, Dickinson (BDX) and Stryker (SYK) lobbied Congress for another suspension or repeal before their first payments were due. "The concern that Congress would not get this done, thereby putting device company estimates at risk, will be lifted," JP Morgan tells clients. House and Senate votes to clinch the deal are expected later today. (peter.loftus@wsj.com; @Loftus)

1724 GMT - The FTSE 100 Index closes down 0.2%, or 15.35 points at 7715.44 as a strong pound against the dollar offsets gains for the likes of Barclays PLC and NMC Health PLC. Sterling gains 0.7% to $1.3950 and the euro gains 0.17% to $1.2241. "The main driver remained the US government shutdown, with the already soft dollar giving back a bit more to the pound and euro," says Connor Campbell at Spreadex. Barclays gains 4.3% on reports of a $1B stake purchase by Tiger Global. NMC Health is up 2.4% after making two acquisitions. Shares in RELX PLC, a business publisher formerly known as Reed Elsevier PLC, falls more than 2% after a gain of more than 1% on Friday following upbeat analyst comments. (philip.waller@wsj.com)

1452 GMT - Novo Nordisk may have to cut share buybacks if it buys Belgian biotechnology company Ablynx NV, says Berenberg. Ablynx has so far rejected two takeover offers from Novo--most recently, a bid totaling EUR30.50 a share--claiming they undervalued the company. Berenberg says Ablynx's shares are now trading at about EUR35 in anticipation of a higher offer. Novo launched a share buyback program of up to DKK17 billion last February and is expected to launch another one this year. "We forecast DKK17-18 billion, but clearly if they do the Ablynx deal, they're not going to be able to maintain that," Berenberg analyst Alistair Campbell says. Shares in Novo trade flat at DKK349.60. Ablynx's stock gains 1.9% to EUR35.00. (philip.waller@wsj.com)

1347 GMT - French pharma company Sanofi has inked an $11.6B deal to buy Bioverativ, paying a hefty premium for the biotech company. This comes after Sanofi missed out on buying Medivation in 2016, which sold itself to Pfizer. Sanofi kicked off a sales process with Medivation at the time. It also lost out to Johnson & Johnson on a deal for Actelion last year. Bioverativ shares are up 62% to $104.19/share, just beneath the price the deal was inked at. Sanofi shares are down nearly 4.3% to $42.71/share. (Dana.Mattioli@wsj.com; @DanaMattioli)

1416 GMT - Abcam's licensing deal for the rights to Spring Bioscience's portfolio bolsters the U.K. company's product catalogue with high-quality, well-established products, says Investec. The portfolio includes 243 antibodies from a technology that Spring licensed from Epitomics a decade ago, the brokerage says. Abcam bought Epitomics in 2012, so the licensing deal allows it to bring the resultant products back in house, Investec says. The brokerage says Abcam's management believes that the deal can be accretive at between 2% and 3% to the company's fiscal 2019 EPS. (dimitrios.kontos@dowjones.com)

1307 GMT - A delay in the approval process for Camurus's opioid disorder treatment CAM2038 comes as good news for Indivior, the pharmaceutical company that is getting ready to launch its own Sublocade product to treat opioid addiction, says Jefferies. Swedish company Camurus announced that the U.S. Food and Drug administration requested that the company put in a new application for it CAM2038 treatment. The broker estimates that this could set back its launch by about 4-8 months. "In our view, a delay to a CAM2038 launch should benefit INDV's positioning as it rolls out Sublocade later this quarter." Shares up 17.30 pence, or 4.3%, to 418.40 pence. (carlo.martuscelli@dowjones.com)

1303 GMT - Sanofi's planned acquisition of Bioverativ comes with downside exposure to a Roche drug could become a threat to one of Bioverativ's main hemophilia drugs, Eloctate, Berenberg analysts say. Sanofi already has a hemophilia drug in its pipeline, fitusiran, which--if successful in phase 3 trials--would be a "valuable addition" to Bioverativ's hemophilia business, Berenberg says. But in an increasingly competitive hemophilia market, Roche's Hemlibra could pose a competitive risk to medium-term sales of Bioverativ's lead drug. Ultimately the value of the deal hinges on fitusiran becoming "a medium-term upgrade" for Bioverativ's main hemophilia treatments, the bank says. (sonia.amaralrohter@dowjones.com)

1258 GMT - The acquisition of biotech company Bioverativ by Sanofi SA will strengthen the French drug maker's rare disease portfolio, but it will have a limited impact on revenue growth, says Jefferies. "Management may have to argue against concerns on competition," it adds. Maintains hold rating with a target price of EUR80. Shares are trading 3.7% lower at EUR70.97. (noemie.bisserbe@wsj.com)

1139 GMT - Shares in NMC Health PLC rise 2.5% to 3362 pence after the private hospital operator acquired majority stakes in two Middle East-based businesses and signed deals to manage hospitals in Egypt. NMC has bought a 70% interest in United Arab Emirates-based cosmetic surgery clinic group CosmeSurge and an 80% stake in Saudi Arabia hospital and clinic company Al Salam Medical Group. Chris Beauchamp at IG says the deals represent further evidence of NMC's ambition to expand its Middle East business. "It's quite a hefty push into the region," he says. (philip.waller@wsj.com)

(END) Dow Jones Newswires

January 23, 2018 04:20 ET (09:20 GMT)

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