Friday Five - This week's key news stories

How low can you go?

AbbVie will be pharma's biggest beneficiary of recent US tax reform. Its tax rate will decline from 18.9 percent last year to 9 percent in 2018; much lower than analysts had expected, prompting AbbVie's share price to skyrocket - see ViewPoints: AbbVie shows that an old dog really can do new tricks.

Pfizer and Eli Lilly were left to rue AbbVie's good news and its impact on heightened investor expectations and both saw share price declines in response to decent fourth-quarter financial results. Though Pfizer and Eli Lilly will benefit from lower tax rates this year versus last (at 17 percent and 18 percent, respectively) neither can match AbbVie's single-digit outlook.

See ViewPoints: Ibrance in Europe - a taxing issue for Pfizer or simply a blip? and ViewPoints: Disconnect between Eli Lilly’s earnings, investors’ reaction.

Sanofi pounces on Novo Nordisk's caution

Having publicly confirmed its pursuit of Ablynx last month, Novo Nordisk saw Sanofi swoop in to acquire the Belgian biotech for $4.8 billion this week.

Novo Nordisk made a point of saying it was unwilling to match Sanofi's offer, but also indicated its commitment to bolt-on deals in haematology. Whether it can marry an appetite for capital deployment with what it considers necessary financial discipline remains to be seen. It may not be the best time to bag a bargain.

Sanofi is doing its level best to stretch the market in favour of sellers. It will pay nearly 50 percent more for Ablynx than Novo Nordisk was willing to. Last week, it said it will part with $11.6 billion to acquire Bioverativ - see ViewPoints: Needs must for Sanofi as it doubles down on M&A.

Another view on Bioverativ

That said, feedback from haematologists snap-polled by FirstWord this week paints a positive picture for Eloctate (for haemophilia A) and Alprolix (for haemophilia B) - the key marketed franchises that Sanofi has acquired through Bioverativ.

See Physician Views Poll Results: Prescribers predict continued growth for Sanofi's new haematology brands

With novel therapies expected to disrupt the haemophilia A market in particular, the rationale for Sanofi entering this disease area has been questioned. It has claimed, nevertheless, that novel antibody-based and gene-therapy treatments will find it challenging to take share from established factor replacement therapies; prescriber feedback goes someway to support this argument.

Amazon steps up its focus on healthcare

Amazon, Berkshire Hathaway and JPMorgan Chase announced an agreement this week to create a not-for-profit healthcare company aimed at cutting costs for their US employees. Technology solutions will be utilised to provide simplified, high-quality and transparent healthcare at a reasonable cost. 

Analysis - ViewPoints: Amazon testing the waters in healthcare.

It is reported the new company will initially focus on using software and apps to help employees reduce their healthcare costs, but could evolve to eventually see the three companies opting to "self-insure" their employees. Another source added that possible ways to bring down costs include providing more transparency over the prices for doctor visits and laboratory tests, as well as by enabling direct purchasing of some medical items.

On a related note, Pfizer and Eli Lilly’s CEO’s both argued this week that increased expenditure on pharmaceuticals may play a critical role in lowering overall healthcare expenditure. Does this claim represent further evolution of pharma’s defence against drug price scrutiny, Meg Tirrell at CNBC asks; the argument was made by Ian Read and David Ricks in response to Amazon’s latest bid to shake up healthcare provision.

Can Seattle Genetics ride in Puma's slipstream?  

Seattle Genetics' move to acquire Cascadian Therapeutics - for $614 million - may have been influenced by the recent setback for Puma Biotechnology's breast cancer treatment Nerlynx in Europe.

Cascadian's lead asset, the HER2 inhibitor tucatinib - currently in Phase II development - could emerge as a potential competitor to Nerlynx; though Puma's drug is facing potential regulatory challenges in Europe, it was approved in the US last year. Cascadian has argued that tucatinib could prove superior both in terms of efficacy against brain metastases in breast cancer patients and reduced toxicity - see ViewPoints: Seattle Genetics looks to make a mountain lion out of Cascadian.

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