You can't say Takeda Pharmaceutical is unwilling to take risks. The Japanese drugmaker went out on an $8.8 billion limb in bidding for the U.S. biotech Millennium Pharmaceuticals. Investors weren't impressed; they dragged share prices down by 8 percent almost immediately. Analysts say that, if the deal goes through, profits are likely to fall over the next fiscal year--by a whopping 55 percent. Plus, some think the buyout offer is way too rich.
But the short-term pain may equal long-term gain. Revenue from Millennium's best-selling blood cancer med Velcade could shore up eroding profits at Takeda, as two of Takeda's best sellers see their patents expire in 2009 and 2011. The smaller company's pipeline offers promise for the future, analysts told the Wall Street Journal. The deal would put "the company in a position to move ahead of the field in anticancer-drug strategies," one said, rating the shares a "buy." We'll see what shareholders think when the tender offer expires next month.
- see the story in the Wall Street Journal