Pharma dealmakers, the price is right for Sweden's Meda

Attention pharma shoppers: Meda AB is a blue-light special. Sweden's biggest drugmaker is currently trading at just 5.4 times its cash flow projected for 2013, Bloomberg points out, cheaper than 95% of its specialty pharma rivals with $1 billion-plus market values. It's a 70% discount in terms of sales and net assets, too.

So what comes with the $2.78 billion company? Its newly FDA-approved allergy fighter Dymista, for one thing, and its projected sales of 2.37 billion kronor by 2016 (about $333 million). It has a portfolio of OTC products, augmented by last year's 1.8 billion kronor buyout of Antula Holding. It's filed for approval for two more drugs, and has four more in the pipeline from that Antula deal.

Then why so cheap? The company has projected declining margins this year as it invests in new drug launches, both the prescription and OTC variety, and emerging markets expansion. "[T]hey've rebased people's margin expectations," Delaware Investments' Todd Bassion told Bloomberg. "They're saying they're making these investments, so now it's kind of a prove-it story." Fondita Fund Management's Markus Larsson said it this way: "They have interesting products and their potential is probably not reflected in the estimates until we see more of their progress,"

But in the here and now, at such a price, a bigger drugmaker might well be interested. Canada's Valeant Pharmaceuticals ($VRX), for instance; the bargain-minded company was said to be sniffing around Meda last year--four years after selling its own European business to Meda, which wanted access to eastern European markets. Japan's Takeda was also rumored to be eyeing Meda. "What do most pharma companies need these days? Product or pipeline or both," Miller Tabak's Les Funtleyder told Bloomberg. "Meda has a number of products that could make it salable."

- read the Bloomberg piece