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Eli Lilly CEO confrims No Big Pharmaceutical Deals

Posted on 08 June 2012

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Eli Lilly won’t be making any mega pharmaceutical deals, Chairman and Chief Executive John Lechleiter said Wednesday.

While the environment is good for pharmaceutical deals, with interest rates low and companies flush with cash, Lechleiter told WSJ today that Eli Lilly will be steering clear of any large deals and will not be diversifying itself.

“There are lots of opportunities to do a deal,” Lechleiter said. “I don’t think we can return to the Lilly of the 1970s, when we were buying up medical device companies…our core is pharmaceutical innovation.”

Eli Lilly ended March with $4.1 billion in cash and cash equivalents and it hasn’t done any sizable deals this year. Its animal health unit has made its most recent purchases, including a $308 million purchase that closed last July.

Eli Lilly hasn’t made a deal worth over $1 billion since its 2008 buy of ImClone Systems, a $7.1 billion deal signed at the height of the global financial crisis and shortly after Lechleiter rose to CEO.

Lechleiter said small add-on deals and partnerships are more likely, but that Eli Lilly believes its current pipeline of drugs offer better prospect than running down its cash pile  buying late-stage products from other drug makers. He also questioned whether acquisitions provide returns for shareholders, saying he’d rather maintain Eli Lilly’s dividend instead.

Though M&A activity on the whole has been rather quiet to start the year, there have been some pharmaceutical deals that have grabbed headlines, including Watson Pharmaceuticals’s $5.9 billion deal to buy Actavis Group and Hologic’s $3.9 billion deal for Gen-Probe. There also have been hostile attempts including Roche Holding’s attempt to buy Illumina and the GlaxoSmithKline pursuit of Human Genome Sciences.

So far this year there have been $49.2 billion worth of pharmaceutical deals around the globe, well under half of last year’s total $129.5 billion, according to Dealogic.

Read the full story at WSJ



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