Lundbeck Makes A Large M&A Move, But The Target Will Be Somewhat Controversial

Danish drugmaker H. Lundbeck A/S (OTCPK:HLUYY) (LUN.KO) (“Lundbeck”) made it clear that they were going to rebuild their revenue and clinical pipeline through M&A, with management highlighting around $4 billion to $5 billion in available capital and a preference for later-stage assets. After a few smaller transactions, Lundbeck finally made a big move, but management’s choice of target arguably leaves something to be desired.

Acquiring Alder BioPharmaceuticals (ADLR) gives Lundbeck a late-stage asset with minimal clinical/regulatory risk, but with significant commercial risk and not all that much pipeline extension value. Lundbeck doesn’t need Alder’s eptinezumab to be a super-blockbuster to get a worthwhile return from this deal, but it could still be challenging to carve out attractive market share as the fourth entrant into the market. With this likely-controversial deal, as well as significant patent cliff pressure and a weak pipeline, it’s harder to argue that there’s a reason for the Street to get much more positive on the shares in the near term.

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Lundbeck Makes A Large M&A Move, But The Target Will Be Somewhat Controversial