Following CSL’s acquisition of Vifor Pharma in December, analysts at Citi believe that the country’s largest pharmaceutical provider will see its earnings per share increase by more than 2 per cent in the 2023 financial year.
CSL announced a deal to buy Vifor Pharma last month for $16.4bn and launched the largest ever equity raising to fund a transaction in Australia’s corporate history, netting about $7bn.
Analysts at Citi said in a research note that they believed that the transaction would be accretive from a net profit after tax and amortisation perspective in the double digits.
The key positive from the transaction was that it enabled CSL to expand its research and development pipeline.
The analysts said they have noted for some time that this was limited for a company the size of CSL.
They said that the key negative was that the transaction was clearly an adjacent business, with no material crossover with what CSL does.
“Time will tell whether this new renal division adds or detracts from the overall CSL strategy.”
It comes after The Australian reported on Thursday that CSL, the nation’s largest pharmaceutical company, has quietly pulled the plug on developing Covid-19 antiviral treatments as it steams ahead on other projects in its $1bn-a-year research program.
Shares in CSL were trading at about 2.55 per cent at AEDT midday trade to $251.75.
The Vifor Pharma deal is expected to close by June.
Vifor licenses, develops and markets specialty pharmaceutical products for iron deficiency, nephrology (kidney disease) and cardio-renal therapeutic areas.
Iron Deficiency Therapies accounts for about 44 per cent of revenue and kidney disease treatment accounted for about 41 per cent in 2020.
The bulk of the earnings are generated inside a joint venture with Fresenius Medical Care (FMC), which sells the Vifor products into the FMC dialysis clinics.
Vifor is expected to launch up to four products in 2022, each having a significant market potential in the kidney disease-related markets.
Such products have been developed externally by partners and investors will be focused on Vifor’s execution of the product launches given the bid premium paid by CSL, Citi said.
The analysts said that after adjusting for slower plasma collection ramp up (Omicron), and incorporating the Vifor consensus forecasts and the synergies of US$75m into its forecasts, they believed it resulted in an earnings per share uplift of more than 2 per cent in the 2023 financial year.
This was largely consistent with CSL’s expectations of the transaction.
Citi maintained its price target on the stock and says it is focused on the levels of plasma collection in the United States, which will impact the 2023 financial year earnings.
In the longer term, the integration and strategic impact of the Vifor acquisition was the key focus.
CoStar boss had eyes on Domain on Australian trip
CoStar founder and president Andrew Florance is understood to have been in Australia late in 2024 as part of his quest to gain control of Domain Group, sources say.
Origin, Goodman ponder demergers, spin-offs
Two listed powerhouses, Origin Energy and Goodman Group, could both have their sights on major demergers or spin-offs of units in the coming years.