4 months ago • 2 mins
What’s going on here?
Roche announced on Monday that it’s buying irritable bowel drugmaker Telavant for $7.1 billion, which should give the Swiss pharmaceutical company a dose of calming relief.
What does this mean?
Roche, like many pharmaceutical companies, made more money than usual during the pandemic and its aftershock. But now that those lingering sales are winding down, the firm needs to find new experimental medicines to keep the cash flowing in – and fast. That’s probably why Roche is making its biggest deal since 2014, acquiring Telavant and its unique antibody therapy – designed in partnership with Roivant Sciences and Pfizer – that can tackle both the inflammation and fibrosis that are common symptoms of various diseases.
Why should I care?
For markets: Swipe the card.
That’s just the start of Roche’s shopping spree: the Swiss company’s on the hunt for all sorts of shiny deals, from early-stage testing projects to drugs in their late development. But there’s no guarantee that retail therapy will heal investors’ moods. The company’s shares have fallen 30% this year while Europe’s stock market index, the Stoxx 600, stayed pretty flat. That’s a sign of concern over Roche’s productivity, and those doubts may well hover around until the firm’s internal research gets a makeover too.
The bigger picture: Big Pharma x Big Tech.
Major pharmaceutical companies have their eyes locked on artificial intelligence, believing in its potential to identify new drugs, streamline production processes, and as a result, pull up company stock prices. Mind you, that’s a long-term plan. So for now, they’ll have to rely on big deals to shake up their businesses. They’ll be in good company, though: major oil players like ExxonMobil and Chevron are shelling out on smaller fry, since the rising cost of borrowing has meant only richer firms can afford to graduate from window shopping.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.