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Biogen Idec
10 мая 2016, 16:00

So Many M&A Deals Fail Because Companies Overlook This Simple Strategy

We have all seen or heard of high-profile cases where M&A deals didn’t work out. AOL–Time Warner, HP-Compaq, Quaker-Snapple — these are just some of the big ones. An analysis of 2,500 such deals by our firm shows that more than 60% of them destroy shareholder value. Perhaps such deals should come with an official warning: “Acquisitions can result in serious damage to your corporate health, up to and including death.” And yet even in light of such daunting data, many corporate leaders feel compelled to pursue growth through M&A, figuring the risks of inaction are just as high. After all, if acquisitions pay off they can provide a transformational antidote to a slowing core market and declining margins. As our research has shown us, the core of the problem is not the high number of M&A deals in itself, but rather that too many executives bring insufficient discipline to the evaluation process that fuels these deals — as a result, they often get deals wrong. For instance, despite the importance of accurately identifying and calculating company synergies, diligence work frequently results in an overly optimistic view of the revenue synergy opportunity. Often the weakest assumptions involve estimates of how much additional revenue the companies can generate when combined. This, in turn, leads bidders to overpay. Our experience with many global companies across industries and sectors has revealed a framework for pursuing growth through acquisition that lowers risks and helps beat the odds. As we’ve written previously, the best path to accelerated growth with limited risk often comes from creating new products and services that leverage a company’s existing resources, customers, and capabilities. In the course of research for our book, we’ve found that this approach also provides an ideal methodology for leaders to identify which M&A deals are most likely to pay off — a disciplined approach that acts as a kind of lens for effectively distinguishing gold from iron pyrite in assessing potential company synergies. Helping customers complete their “journey” An example of a stunningly successful merger was Procter & Gamble’s 2005 acquisition of Gillette. While some cost synergies were realized, the real payoff came because each company independently recognized that it had the permission to expand what it was offering to its core customers and that the capabilities to deliver on this potential resided in the other company. Gillette dominated the men’s shaving market with its Mach series of razors. P&G was able to combine Mach blade technology with its women’s skin care expertise to market women’s shaving products under the Gillette Venus brand. Gillette introduced new shave lotions, deodorants, and shower gels for men using P&G’s soap, lotion, and antiperspirant technology and expertise. These acquisition synergies worked because they leverage what we call a “journey edge” — a place where current offerings can be expanded in subtle but logical ways along the fuzzy demarcation between existing product definition and customer receptivity. In accessing this type of opportunity, there is the challenge, “What permission would customers give us to extend our role in helping them to achieve their ultimate mission?” Gillette felt it had permission from its razor customers to offer them a bit more to support their ultimate mission of getting a great shave. Contrast this with another well-known deal: When eBay bought Skype, eBay executives implicitly thought that video chat belonged somewhere on the journey their customers experienced, and that eBay would be granted permission to offer this extension to its core offering. The reality was that most customers didn’t see a need for video chat to conduct online auctions, and if they did, they didn’t feel they needed eBay to provide it for them. In part, the deal failed because the combination wasn’t welcomed as a way to better complete an important customer journey. By more rigorously mapping the journey and testing the premise of customer permissions, eBay might have seen that the cross-selling synergy was not as robust as thought. Testing where else your foundational assets will work Edge mindset and discipline can also increase the likelihood of a merger paying off by capitalizing on latent capabilities or underutilized assets of the combining companies. This is the discipline behind what we term “enterprise edges,” where we ask, “Who besides a competitor would pay to access my assets?” This thinking helps identify new revenue streams for a business by challenging where else assets that have been assembled to serve our core business could be utilized. To test this framework in the M&A context, we ask, “In the absence of a deal, would the acquiree pay for access to my assets?” This relatively simple approach is actually a powerful tool to help confirm or deny the potential for synergies. The rationale for this approach is highlighted when you compare, for example, the different approaches to M&A employed by a number of legacy pharmaceutical companies and by some relatively newer players in the biotechnology industry. We have all seen big pharma deals in which companies were eager to find large sources of revenue growth to fill their pipelines and to meet ongoing shareholder expectations, making major acquisitions in order to access blockbuster ($1 billion or more) drugs developed by other companies. However, this approach to seeking growth often saddled these companies with unwieldy portfolios of additional assets, many of which had to be unloaded at discounts to the original premiums paid (in other words, technologies they didn’t have the expertise to cultivate and markets they didn’t fully know how to commercialize). By contrast, some of the key players in biotech (Biogen Idec, Amgen, Genentech) have tended to take a more disciplined approach. For example, Gilead grew from a tiny startup developing H.I.V. therapy to a major drug company with $30 billion in annual revenue by successfully deploying what we would call an “edge strategy” approach to M&A. It was propelled by a series of disciplined acquisitions, mainly of companies with drugs for other infectious diseases, such as Hepatitis B and Hepatitis C. In other words, Gilead capitalized on a key foundational asset — its deep expertise in developing and marketing an antiviral franchise — and used this to pressure-test where else this capability could be put to work. While one can’t make a specific claim of causation related to these approaches, we believe it has helped lead to Gilead’s strong performance over the past 15 years, which significantly outpaced the broader Pharma index, and that it has played a part in the biotech sector’s remarkable growth over the same period. Ultimately, the key is discipline. By rigorously and relentlessly asking two questions — “How will the deal help our customers to complete their journey?” and “How is the deal using our foundational assets to create value in a different context?” — an edge strategy approach to M&A can mitigate the risks of an inherently risky business.

21 апреля 2016, 17:17

Biogen (BIIB) Tops on Q1 Earnings, Slight Revenue Miss

Biogen's (BIIB) first-quarter earnings were well above expectations though Tecfidera revenues declined sequentially.

27 января 2016, 19:35

Biogen Tops on Q4 Earnings by a Wide Margin, Provides View

Biogen's (BIIB) fourth quarter earnings shot past expectations with Tecfidera improving sequentially.

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11 декабря 2014, 17:26

Biogen Idec (BIIB) Stock: Moving Average Crossover Alert - Tale of the Tape

Biogen Idec (BIIB) Stock: Moving Average Crossover Alert

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03 декабря 2014, 17:39

Biogen Idec (BIIB) Shows Strength: Stock Moves 6.4% Up - Tale of the Tape

Biogen Idec Inc. (BIIB) was a big mover last session, as its shares rose over 6% on the day.

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02 декабря 2014, 22:36

Tuesday Sector Leaders: Healthcare, Utilities

The best performing sector as of midday Tuesday is the Healthcare sector, up 1.0%. Within the sector, Biogen Idec (NASD: BIIB) and Alexion Pharmaceuticals (NASD: ALXN) are two large stocks leading the way, showing a gain of 6.8% and 4.5%, respectively. Among healthcare ETFs, one ETF following the sector is [...]

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14 ноября 2014, 22:35

Friday Sector Laggards: Healthcare, Consumer Products

Looking at the sectors faring worst as of midday Friday, shares of Healthcare companies are underperforming other sectors, showing a 0.9% loss. Within the sector, Biogen Idec (NASD: BIIB) and Celgene (NASD: CELG) are two large stocks that are lagging, showing a loss of 4.2% and 3.8%, respectively. Among healthcare [...]

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21 октября 2014, 00:45

Will Biogen Idec (BIIB) Pull a Surprise this Earnings Season? - Analyst Blog

Biogen Idec Inc. (BIIB) is scheduled to report third-quarter 2014 results before the opening bell on Oct 22.

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26 сентября 2014, 18:06

Biogen to report on October 22

Biogen Idec (BIIB +0.1%) will report Q3 results before the open on October 22. The conference call will start at 9:00 am ET.Consensus view is EPS of $3.45 on revenues of $2.5B. Post your comment!

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16 сентября 2014, 01:50

Biogen/AbbVie Report Positive Data on MS Drug Zinbryta - Analyst Blog

Biogen Idec Inc. (BIIB) and partner AbbVie Inc. (ABBV) announced detailed positive results from the phase III study on Zinbryta.

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13 сентября 2014, 00:30

Biogen Reports Positive Two-Year Data on MS Drug Plegridy - Analyst Blog

Biogen Idec Inc. (BIIB) announced encouraging data from the phase III ADVANCE study on Plegridy in patients suffering from relapsing+remitting multiple sclerosis.

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22 августа 2014, 00:31

Isis earns milestone payment from Biogen

In a regulatory filing, Isis Pharmaceuticals (ISIS -3.1%) discloses that it earned an $18M milestone payment from development partner Biogen Idec (BIIB -1.1%)  by virtue of dosing the first infant in the ENDEAR Phase 3 clinical trial evaluating ISIS-SMNrx as a treatment for spinal muscular dystrophy. Post your comment!

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17 августа 2014, 05:41

Biogen's MS therapeutic cleared for sale in U.S.

The FDA approves Biogen Idec's (NASDAQ:BIIB) Plegridy (peginterferon beta-1a) for the treatment of patients with relapsing forms of multiple sclerosis (MS). It is the only pegylated beta interferon approved for this indication. The dosing regimen is once per two weeks subcutaneously.The European Commission approved Plegridy for relapsing-remitting MS in late July 2014. Post your comment!

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13 августа 2014, 22:37

Wednesday Sector Leaders: Healthcare, Technology & Communications

In afternoon trading on Wednesday, Healthcare stocks are the best performing sector, higher by 1.0%. Within that group, Vertex Pharmaceuticals (NASD: VRTX) and Biogen Idec (NASD: BIIB) are two of the day's stand-outs, showing a gain of 3.7% and 2.9%, respectively. Among healthcare ETFs, one ETF following the sector is [...]

31 июля 2014, 14:35

Cramer's Lightning Round - 6 Biotech Picks (7/30/14)

By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round segment of Jim Cramer's Mad Money Program, Wednesday July 30.  Bullish Calls:Regeneron (NASDAQ:REGN), Celgene (NASDAQ:CELG), Biogen Idec (NASDAQ:BIIB), Gilead (NASDAQ:GILD), Seattle Genetics (NASDAQ:SGEN), Isis Pharmaceuticals (NASDAQ:ISIS): "In biotech, I like Regeneron, Celgene, Biogen Idec and Gilead. I also like Seattle Genetics and Isis Pharmaceuticals." EMC (NYSE:EMC): "Long term, it might be okay. Now, I'm not crazy about it, but because of saber rattling, it is going higher." Pitney Bowes (NYSE:PBI): "It has moved so much, but those guys are smart, they are doing a lot of great things. It can go higher." Thermo Fisher Scientific (NYSE:TMO): "That was a good quarter, and you did well in that. I urge you to stay with this." DexCom (NASDAQ:DXCM), Edwards Lifesciences (NYSE:EW), St. Jude Medical (NYSE:STJ): "We had DexCom on. I like that company. I think someone might want to buy it. I like Edwards Lifesciences  Complete Story »

31 июля 2014, 14:35

Cramer's Lightning Round - 6 Biotech Picks (7/30/14)

By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round segment of Jim Cramer's Mad Money Program, Wednesday July 30.  Bullish Calls:Regeneron (NASDAQ:REGN), Celgene (NASDAQ:CELG), Biogen Idec (NASDAQ:BIIB), Gilead (NASDAQ:GILD), Seattle Genetics (NASDAQ:SGEN), Isis Pharmaceuticals (NASDAQ:ISIS): "In biotech, I like Regeneron, Celgene, Biogen Idec and Gilead. I also like Seattle Genetics and Isis Pharmaceuticals." EMC (NYSE:EMC): "Long term, it might be okay. Now, I'm not crazy about it, but because of saber rattling, it is going higher." Pitney Bowes (NYSE:PBI): "It has moved so much, but those guys are smart, they are doing a lot of great things. It can go higher." Thermo Fisher Scientific (NYSE:TMO): "That was a good quarter, and you did well in that. I urge you to stay with this." DexCom (NASDAQ:DXCM), Edwards Lifesciences (NYSE:EW), St. Jude Medical (NYSE:STJ): "We had DexCom on. I like that company. I think someone might want to buy it. I like Edwards Lifesciences  Complete Story »

31 июля 2014, 14:35

Cramer's Lightning Round - 6 Biotech Picks (7/30/14)

By SA Editor Miriam Metzinger: Stocks discussed on the Lightning Round segment of Jim Cramer's Mad Money Program, Wednesday July 30.  Bullish Calls:Regeneron (NASDAQ:REGN), Celgene (NASDAQ:CELG), Biogen Idec (NASDAQ:BIIB), Gilead (NASDAQ:GILD), Seattle Genetics (NASDAQ:SGEN), Isis Pharmaceuticals (NASDAQ:ISIS): "In biotech, I like Regeneron, Celgene, Biogen Idec and Gilead. I also like Seattle Genetics and Isis Pharmaceuticals." EMC (NYSE:EMC): "Long term, it might be okay. Now, I'm not crazy about it, but because of saber rattling, it is going higher." Pitney Bowes (NYSE:PBI): "It has moved so much, but those guys are smart, they are doing a lot of great things. It can go higher." Thermo Fisher Scientific (NYSE:TMO): "That was a good quarter, and you did well in that. I urge you to stay with this." DexCom (NASDAQ:DXCM), Edwards Lifesciences (NYSE:EW), St. Jude Medical (NYSE:STJ): "We had DexCom on. I like that company. I think someone might want to buy it. I like Edwards Lifesciences  Complete Story »

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24 июля 2014, 20:40

What Makes Biogen Idec a Biotech Standout?

Biogen Idec is not a one-drug wonder, but has three blockbuster drugs, and a presence in treating various diseases with a strong focus in multiple sclerosis.