The US$11.7bn CSL Vifor deal could be a match made in heaven

Nick Sundich Nick Sundich, October 17, 2022

It has been over two months since the CSL Vifor deal was completed. CSL held an investor briefing this morning, outlining the opportunity the company has before it. 

 

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CSL Vifor deal to help the fight against kidney disease and iron deficiency

The CSL Vifor deal was the biggest buyout in CSL’s 106 year history, costing US$11.7bn. Vifor’s two largest products are iron deficiency treatment Ferinject and kidney disease treatment Mircera. 

The company anticipates there is a significant market for both products with Chronic Kidney Disease (CKD), that affects 15% of adults in the US, and in the renal market that’s growing at a low double digit CAGR. Iron efficiency meanwhile impacts over 3 billion people globally.

 

csl vifor

CSL (ASX:CSL) share price chart log scale (Graph: TradingView)

 

Helping CSL’s bottom line too

Of course, all biotechs will tell you they have a good opportunity ahead of it, but the majority are small caps that have not yet capitalised on those opportunities.

Vifor, however, has not only capitalised on it, but is the market leader with a 29% market share in the overall market and a 50% share in the high dose IV iron segment.

But what’s in it for CSL shareholders? They were told to expect a 13% to 18% higher net profit (after amortisation) of US$2.7bn-$2.8bn.

 

But there are still some questions about the deal

However, the fact that the company is holding a webinar on a completed deal would indicate it had some questions to answer to shareholders.

Analysts had commented to the media that there had been very little information shared. And there was a concern about what would happen when Ferinject’s patents expire, next year in Europe and in 2028 in the USA. The company believes that either the competition won’t be able to keep up, the market will just keep on growing, or both. 

Investors might also start to think that the CSL Vifor deal indicates CSL is about to become a big M&A player. CEO Paul Perreault said this would not be the case, but evidently, the opportunity was too good to pass up.

If CSL’s previous guidance is replicated for FY23, shareholders will likely react positively. But until then, we don’t expect too significant an investor reaction to the CSL Vifor tie up.

 

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