Last week, U.S. drugmaker AbbVie bought Dublin-based Shire in a $54.7 billion deal that will allow it to slash its tax bill by relocating outside of the U.S. One week prior, Salix Pharmaceuticals announced plans to merge with Cosmo Technologies, an Ireland-based subsidiary of Italy’s Cosmo Pharmaceuticals. The deal would allow Salix to re-domicile in Ireland, reducing its tax rate to the low 20% range from the high 30% range.
The strategic rationale for these deals becomes painfully clear (at least for US-domiciled firms) with one glance at the chart below. In response, Congress has predictably responded with threats to stop these deals from occurring (rather than addressing the underlying reason for their occurrence), but in the interim, we think it’s safe to assume that pending restrictions are likely to drive increased activity ahead of any potential rule change. Not a bad thing for certain owners of European commercial real estate.
Lately, however, drug companies have been showing us that they know how to mix things up as many are in hot water over a slew of issues in China (none of which should surprise anyone with experience operating on the mainland): bribing doctors, government officials, falsifying data, etc. The latest from our favorite pharma news source, which has lately been reading like a spicy gossip rag, is a bizarre story of a British PI who, in the process of investigating a GSK executive suspected of bribery, managed to obtain a videotape of said executive and his local girlfriend in flagrante delicto.
Chinese officials were originally planning to hold the related trial as a closed proceeding, but have bowed to international pressure and agreed to a public trial.
So for those of you who enjoyed the Clinton-Lewinsky transcript, keep your eyes out for a video adaption from the world of Big Pharma.