Healthcare Business Recap: Novartis In COURT In India, Aetna PURCHASES Coventry
These were Monday’s top stories:
Novartis AG (NYSE:NVS) may face a rough road in India, where the government has rejected its request for a patent for its leading cancer-drug Glivec. The country is currently experiencing a stalling economy plus high inflation, and is more unpredictable and less friendly to foreign firms. Novartis will appear before the Supreme Court of India on Wednesday to plead its case.
Aetna, Inc. (NYSE:AET) reports that it will purchase Coventry Health Care, Inc. (NYSE:CVH), in a transaction valued at $7.3 billion, which will include the assumption of the latter’s debt. Through the terms, Coventry shareholders will receive $27.30 in cash and 0.3885 Aetna common shares for each Coventry share, or $42.08 per share, which marks a bonus of 20 percent to the Friday closing price. This acquisition should add more than 5 million members to Aetna and swell the revenues from government from 23 percent to more than 30, and also should produce synergies of $400 million per year in 2015.
Looming patent expirations have top drug firms such as Eli Lilly and Company (NYSE:LLY) and Pfizer (NYSE:PFE) reassuring their investors that they will cover the problem by exploiting growth in emerging markets. However, slumping economies plus competition from local companies are pushing back expectations, and E&Y calculates a $47 billion deficit between the American firm’s sales expectations and what they might actually earn.
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