Tuesday tips round-up: AstraZeneca, Pfizer

6th May 2014 07:32

The latest quarterly results out from Pfizer overnight revealed why it is so keen to acquire AstraZeneca. In recent times it has proved to be more nimble at purchasing rivals than at developing new drugs. The UK-listed outfit, on the other hand, is at the beginning of a Renaissance. Hence, in fact, a 63bn pound price tag may turn out to be cheap. Furthermore, there are reports that Pfizer may have the intention of splitting up its Anglo-Swedish peer into three units, so as to extract greater value. To that one can add Pfizer's track-record in regards to jobs and ruthless cost-cutting at previously acquired firms. "For every Jaguar Land Rover, where overseas ownership has been a boon, there is a Cadbury." The government would be foolish to take Pfizer at its word that it will preserve jobs and research in the UK, writes The Daily Mail's Ruth Sutherland. Overnight Pfizer unveiled its brand-new reporting structure which includes three units. The dividing lines are roughly a function of how much remaining patent protection a product has or how dependent it is on such a barrier-to-entry. In general companies provide greater transparency with an eye to higher valuations. Such an unusual cost-reporting structure allows bankers leeway to come up with more favourable valuations on a sum-of-the-parts basis. That comes as Pfizer is considering a spin-off of its Global Established Pharmaceuticals (GEP) unit, comprising those products which have seen their patent protection come off are about to do so. So here goes a question for Pfizer. "If you buy AstraZeneca, exactly which drugs will go into GEP? An equivocal answer would be a warning," writes The Financial Times' Lex column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB