Abbott to Buy Kos Pharmaceuticals for $3.7 Billion
Abbott to Buy Kos Pharmaceuticals for $3.7 Billion
Abbott to Buy
Abbott Laboratories, the maker of heart drugs, stents and nutritional supplements, agreed to buy Kos Pharmaceuticals Inc. for $3.7 billion, adding to its cholesterol treatments.
Abbott will pay $78 for each
The deal will give Abbott the most powerful drug available for elevating good, or
``It gains Abbott critical mass'' in the cholesterol market, said Bruce Cranna, an analyst with Leerink Swann & Co. in Boston, in a telephone interview. ``They already have a small toehold with a drug called Tricor, to reduce triglycerides. This allows them to compete to a greater extent.''
Shares of
Debt Ratings
Standard & Poor's affirmed its AA investment grade rating on Abbott's debt. Fitch Ratings placed Abbott on ``rating watch negative,'' anticipating a one-notch downgrade when the transaction is completed. Fitch said Abbott's capital structure is already stretched by the debt it took on to buy the vascular business of Guidant Corp. for $4.1 billion in April. It rates Abbott debt AA-.
At 3.7 times estimated 2007 revenues and 30 times estimated 2007 earnings per share, ``the deal is not exactly cheap,'' said Michael Weinstein, a JPMorgan Securities analyst, in a note to investors. ``The longer-term merits of the transaction hinge on Abbott's ability to extend
Pharmaceutical Salesman
Chairman Emeritus Jaharis and his family held 24.5 million shares, or 52 percent, of
A former pharmaceutical salesman, Jaharis and a partner acquired Key Pharmaceuticals Inc. in the early 1970s and sold it to Schering-Plough Corp. in 1986 for $836 million. Jaharis and his management team started
Heart disease is the leading cause of death worldwide and in the
The purchase will give a ``significant'' boost to Abbott earnings after 2008 and will reduce profit by 2 to 3 cents a share in fiscal 2007, Abbott said.
Humira Acquisition
Niaspan is an extended-release version of niacin, a B vitamin that is necessary for growth and health. While the naturally occurring substance elevates good cholesterol, taking it in therapeutic amounts for that purposes raises the risk of liver damage, ulcers and skin rashes.
Even
Sales of Niaspan have benefited from recent studies showing that raising good cholesterol can reduce heart risk. Revenue from Niaspan rose 24 percent to $131 million in the second quarter. Merck & Co. and Pfizer Inc. have suffered recent setbacks on experimental competing products.
AIDS, Infections
The U.S. National Institutes of Health is funding a study to see whether Niaspan with simvastatin is better than simvastatin alone in preventing heart attacks and strokes. The results of the study aren't expected until 2010.
Most of Abbott's drugs treat diseases such as AIDS, epilepsy, rheumatoid arthritis and severe infections. Its Tricor medicine cuts levels of bad and total cholesterol while increasing good cholesterol. The drug isn't as potent as treatments such as Niaspan or Pfizer's Lipitor and Zocor, and studies presented last year raised questions about how well it prevented heart attacks and deaths.
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