Why the deal is going to pass FTC.

Everyone else has an opinion, so why should I hold back.

This is why I feel the deal will pass very soon.

-In 1990, there were 13 producers of plasma-derivative products; in 2003, there were nine.
Today there are only five: CSL, Talecris, Baxter, Grifols, and Octapharma. Indeed, over time, as consolidation has occurred in the plasma industry, prices have increased. GPOs, hospitals, physicians – and ultimately patients – have experienced tightening supplies and rising prices in recent years.

-Ig manufacturing is a tight oligopoly in which the leading three manufacturers . . . have a
combined market share of around 85%.

-Two other industry firms, Grifols, and Octapharma, are much smaller, with market shares in the single digits, and limited ability to expand their presence in the United States.

-There are no good substitutes for Ig. If there was......

-The post-merger market share of the merged firm would not range from 42% to 82%, depending on the market, thus making this deal viable. Nothing to stop the deal. This would be a huge deal breaker by the FTC, and signal suit.

-The Merger would not decrease the number of firms with control over supply of the relevant
products, and it would not significantly increase industry concentration.

The only thing I can think of that the FTC would be concerned about is:

-The elimination of Talecris – itself a unique competitive constraint in the relevant
markets – would be particularly detrimental to competition. Hence the little ones...I don't see the FTC doing a 180 on this point.

I don't work in this industry, but if I were an investor (hint hint) I would bet the farm this passes.

 

Interesting post. Nice to see a relevant posting.

 

I'd like to chime in as well. To those in the know, Grifols is the best performing company in the plasma business today, bar none. They continue to execute regulatory, QA/QC, and product integrity standards well above the self-imposed industry standards (www.pptaglobal.org) or those imposed by US, EU, and Japanese regulatory authorities.

They always seem to be steps ahead of everyone else in the manner in which they implement plasma collection sops and self-conducted audits. I can tell you that each and every global regulator has nothing but high praise for Grifols and the way they conduct all facets of their plasma and diagnostic business.

At the present you have Octapharma attempting to recover from a humiliating IVIG global voluntary withdrawal while Baxter, CSL, and the PPTA find themselves defendants in a class action suit filed by over 20 US based hospitals, including the Mayo Clinic, due to alleged price manipulations of IVIG. Sensing what was coming, it's probably one of the main reasons the FTC blocked the CSL merger with Talecris and why CSL dropped their legal challenge strategy.
The deal will be approved by the FTC.

 

More threads like this and less of the other garbage usually being posted on this board.

Thanks.

 

Why is Bloomburg reporting that the FTC will sue?

 

Because the FTC is not going to approve this acquisition, that is why!

If they are threatening to sue the deal is dead - review all the data from the CSL deal this is almost a 100% repeat performance.

 

WRONG. Please research the FTC website and access the portal for CSL/Talecris merger. Read the file.

This is NOTHING like that deal. The FTC wont sue, and the deal will pass. PERIOD.

 

Dear First Anonymous and Supporters:
The Deal is going to pass?



“In 1990, there were 13 producers of plasma-derivative products; in 2003, there were nine. Today there are only five: CSL, Talecris, Baxter, Grifols, and Octapharma. Indeed, over time, as consolidation has occurred in the plasma industry, prices have increased. GPOs, hospitals, physicians – and ultimately patients – have experienced tightening supplies and rising prices in recent years”
That’s OK


“-Ig manufacturing is a tight oligopoly in which the leading three manufacturers . . . have a combined market share of around 85%.”
That’ s OK

According to J.P.Morgan , UBS, and others, the leading three manufacturers have in the United States a 83% market share. 36% Baxter, 24% CSL, 23% Talecris. Grifols has 8%

World total according to J.P.Morgan , UBS, and others, the leading three manufacturers have 55,7% IVIG Market Share for 2010 or if you prefer with Octagam off the Market, they have 57,8% (Baxter 21,5% , CSL 19,1%, Talecris 15,1%)
The combined assumed world market shares in 2011 are 54,1 and 56 with Octagam off.


“-Two other industry firms, Grifols, and Octapharma, are much smaller, with market shares in the single digits, and limited ability to expand their presence in the United States.”
That’s OK

“*-There are no good substitutes for Ig. If there was......”
That’s OK

“-The post-merger market share of the merged firm would not range from 42% to 82%, depending on the market, thus making this deal viable. Nothing to stop the deal. This would be a huge deal breaker by the FTC, and signal suit.”
That’ s not OK
Or better, it is a nonsense.
If the deal, merge (or better: acquisition) happens then we have a little monster born named GrifolsCrisis ranked 1st in the world’s 2010 IVIG Market Share.

J.P. Morgan’ s 2011 World Forecast for IVIG Market Shares: GrifolsCrisis 24,6% vs. 19,5% Baxter or 19,9% CSL. These numbers increase all 1% each if we consider the 2011 Octagam off scenario. (very plausible)

In USA IVIG market 2nd place for the new little baby with 31% GrifolsCrisis between 36% Baxter and 24% CSL


For the whole Plasma Fractionation, the numbers are very close to IVIG.
GrifolsCrisis becomes World 1st with a fractionation capacity of 8.5 million liters / year (mly) vs. 6.4 mly CSL or 6.2 mly Baxter.

2010 GrifolsCrisis fractionation throughput 7.4mly vs. 5.9 mly CSL or 5.4 mly Baxter.


2013 GrifolsCrisis Plasma capacity forecast 9.9 mly vs. 7.4 mly Baxter or 7.4 mly CSL
2013 GrifolsCrisis Plasma throughput forecast 8.8 mly vs. 7.1 mly CSL or 6.3 mly Baxter.

For the alpha-1 proteinase inhibitor or Alpha 1-Antitrypsin, the other main or key product with IVIG, the numbers are even worse for the acquisition. All J.P. Morgan analysis.

The possibility of new market entrants in the near future is uncertain as nobody cannot assess whether or when new IGIV products might be licensed for marketing in the United States. Moreover, even if new IGIV products may be available, the production capacities of most potential entrants are currently unknown.


“-The Merger would not decrease the number of firms with control over supply of the relevant products, and it would not significantly increase industry concentration.”
No? That’ s not OK. Please add.

“-The elimination of Talecris – itself a unique competitive constraint in the relevant
markets – would be particularly detrimental to competition. Hence the little ones...I don't see the FTC doing a 180 on this point.”
That’ s not OK.
You don’ t see?

"I don't work in this industry, but if I were an investor (hint hint) I would bet the farm this passes."
Sure. You don t work in this industry. Yes. You are Lawrence Stern (hint hint)





Grifols is small, with U.S. market share in the single digits, and limited ability to expand their presence in the United States, so:

Has Grifols $4 billion ($3.6 billion + $600 million for Talecris debt) for the deal (acquisition) No.
Who has it? The Banks. They put the money. The biggest transaction in New York since the economic crisis began.
Which Banks? Deutsche Bank, Nomura, BBVA, BNP Paribas, HSBC, & Morgan Stanley
What the Banks want? The Money.
Think The Banks this acquisition would be good for the American patient? Or for Grifolscrisis to return the investment? Answer this yourself.

What Grifols would do? Do not change too much the current Talecris management structure in 4-5 years, because they see it as a money machine. Poor Talecris employees.
Support to this: They still maintain in LA some of the biggest management idiots in business in former acquired Alpha Therapeutic Co, now Grifols USA.

Of course, every medium-big decision would be done in Barcelona, not in North Carolina.

But the deal might not happen.
The numbers shown above talk themselves and…

Did Tomas Daga and Raimon Grifols, the Grifols architects of the deal plus the Grifols’ Board of Directors knew that the current FTC board of directors and their bosses hate to death Dan Quayle & John W. Snow? The Cerberus (seller) part.

Did they know that members of the current White House administration are dead set against FTC approval of the proposed acquisition until Cerberus has submitted their plan to pay back every dime, plus compounded interest, of their US taxpayer bailout funds?

Did they know that 50% of public hospitals cannot purchase enough IVIG to meet all patient needs?

Did they know that CSL and Baxter blessed the Grifols Talecris acquisition? Fewer players to arrange IVIG and Alpha-1 price.

Did they know The White House and European Union calls this an Oligopoly?

Did they know 27 percent of U.S. hospitals had instituted criteria for prioritizing IVIG use?

Option 1: They didn’ t know. They are really bad players.
Option 2: They did know. They are really bad players.

Of course Gordon, Ressler, Baer, Freedman & Grochowski knew. And Stern too, the new Ernst & Young Entrepreneur of The Year 2010 in Health Sciences Category.

Perhaps they both, Daga and Ramon Grifols, should pay the $375 million fee to Talecris if the deal would not happen. One year before CSL agreed to pay only a $75 million fee. And the Grifols’ Board of Directors too, who "did not anticipate in June 2010 any problem with the FTC"... Sic.

But not the Grifols employees. Not the American patients.

Meanwhile, Kuhn sells 46,130 shares (profit $ 989,489), Engle sells 36,912 shares (profit $ 790,655) Abelson sells 30,000 shares…Petteway sells 25000 shares. And yesterday Bank of New York reduces their Grifols shares from 4,97% to 2,94%

We don’t know what will happen. Nobody knows.
Remember Master Yoda: Always in motion is the Future.


PD But Yoda probably wouldn’t risk a single cent in this deal.

 

Thanks for the post above. Very interesting!

 

Steven Feinberg and his perverted style of management has pissed off a lot of people who think he is a super private equity freak. His shadow tactics have drawn more attention to Cerberus than if he kept his milly mouth shut! Yes, Quayle and Snow and the Halliburton connection are just too blatant to hide under the covers. His most recent past acquisitions of an arms company reeks of militarism and tea party mentality. The guy and his guys are worse than welfare recipients who have punked the US taxpayers.

His favorite past time is shooting American wildlife. I say smother him in honey and turn him loose in the Alaskan wilderness with a compass,satellite phone,a baloney sandwich, and a butter knife. Would the little mean wall street bandit make it out alive?

Duhhhh, I don't know!

 

Now let's leave little stevie alone. The republican party needs his continued financial support if they are going to have any luck stopping obama from winning a second term.

 

I want to ask your opinion.
Why does Grifols maintain the "The biggest management idiots in business in former acquired Alpha Therapeutic Co.?" If "Grifols" knows their "Idiots" why do they keep them? These guys are driving the U.S. side of the business.

I also want to say that your posting is quite interesting and exciting to speculate about. I personally believe Grifols would not have persued this deal without knowing the facts and the risks. Mr. Grifols is a fantastic buisness man and has the guts to fight it out with the FTC so I think it will get interesting soon.

 

Grifols has a history of taking calculating risks and beating the odds. They have avoided what some Texans may refer to as wildcat drillers symdrome, and for good reason. Intuitive decisions made with exceptional high probabilty models versus competive lessor (market) intelligence, put them on top of the curve. Depending on whether you are low to high risk determines your table bet strategy. With Grifols, they are expert card counters, and expert students of the behavorial sciences. I wouldn't attempt to play poker with them, especially if you are a bluff artist!

Nostradamus

 

I do not know if the above is accurate, but Mr. Grifols steadfast refusal to consider recombinant clotting factors to be a good therapeutic choics has been anything but wise.

 

Stock price still holding steady. The street still believes the deal will pass the FTC. Stay tuned and watch the stock price. These "wall street types" always find out in advance what's happening behind the scenes ... that's why they make so much money!!!

 

Mr. Grifols made an excellent decision not to enter the recombinant factor 8 or 9 marketplace. Every major regulator knows that the safety profile of plasma derived factors has almost eliminated the safety gap that existed earlier between the two. Emerging, third world markets will never be able to afford the high priced recombinants so I accept your logic as flawed and without merit.

 

recombinent has a resistance which causes cost for a partner product. Mr Grifols has dealt with reality

 

But Buttercup will win in the fifth with a perfecta.

 

And you will lose your wife and kids in a bitter divorce. trifecta!

 

The above posters have made some good points. Yes, the current plasma products are very safe, and the emerging markets will likely utilize more plasma factor than recombinant, due to cost issues. There is also some data that suggests recombinant factor may cause more inhibitors that plasma, but there is in no way a consensus on this among HTC physicians. Even among those who do believe it, they still use primarily recombinant products.

Despite all of the above, well over 90% of the US patients are on a recombinant product. Mr. Grifols' hard line stance has, at the very minimum, made his company a very minor player in the single largest market in the world. Furthermore, developing recombinant products does not mean that you should abandon plasma factors. Look at Baxter and CSL, both of whom still make and sell plasma factors despite also selling tons of recombinant products.