RE:RE:Bring back Beaudet (Part II)
Thank you MrMugsy, what a great post.
Yes, the Medison deal didn't work out. If doing bad deals was a continuous thing, I would be worried. But anyone can make a bad deal on a long enough time horizon. Furthermore, this deal wasn't a disaster - it didn't work, and yes there's always an opportunity cost, but certainly we got out of it relatively unscathed even though it went just about as bad one could have imagined. With such limited downside, I'm quite convinced that the deal was +EV, but within that EV there's a range of outcomes from good to bad, and this time it was one of the bad ones. But again, hardly a disaster. In the end, the deal was essentially reversed.
Aside from Medison, what should the company have done differently so far?
Some might say they should have made more deals. But is anyone here critising the management also aware of any deals they missed, and the terms of those deals? Making intelligent decisions with capital means the volume of deals is cyclical. To an extent, the market conditions determine your capability of doing deals. If you're making lots of deals regardless of the market conditions, you're probably making a lot of bad ones as well.
Also, important to note that "one deal" now can be "many deals" depending on how you look at it. The Incyte drugs will be distributed to Brazil, Argentina, Colombia, Mexico, and some other LATAM countries. That's two drugs but 10+ markets.
So anyway, we now have:
- an (almost) integrated platform in the highest-growing pharma market in the world (LATAM),
- several drugs in several markets in a growth phase,
- several market launches in the pipeline,
- a $50M/year drug about to be transferred over,
- more than $40M of operational cash flow (TTM),
- $300M net in cash, marketable securities and financial assets,
- an opportunistic management using excess capital efficiently by taking an advantage of the low share price (with $60M+ spent on buybacks during last year).
In general, I wish people on this board focused more on the business, not the share price. But you can't have everything you wish for. :)