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Johnson & Johnson (JNJ) agreed to buy Pfizer's (PFE) consumer health products unit for $16.6 billion, twice what some analysts expected, to get the maker of Sudafed cold medicine, Listerine mouthwash and Bengay pain cream. J&J already has some of the world's best-known brands, from Band-Aid bandages to baby shampoo. The purchase expands J&J's consumer operations by more than a third to $13 billion a year in sales, or almost a quarter of revenue. Pfizer said it will increase its share buybacks and use funds to develop and acquire new products for its drug division.

This price seems high, but it also seems like a price from which J&J can extract value. Johnson & Johnson is well positioned for acquisitions because it has $16.8 billion in cash. The 120-year-old company is also the world's largest maker of medical devices and the second-largest U.S. prescription drugmaker behind Pfizer. J&J has more than 200 operating units that also make iBot climbing wheelchairs, Cypher heart stents and DePuy orthopedic implants.

J.P. Morgan downgraded drugmaker Sepracor (SEPR) to neutral, citing a strong growth in the company's share price on the back of takeover speculation. "While we agree that Sepracor would make a solid acquisition target, our overweight rating was based on our fundamental outlook," J.P. Morgan said. "Following the current run in share price, we believe the upside may be limited."

Boston Scientific (BSX)
is providing safety information and recalling some pacemakers and defibrillators from its sales force and hospital inventories. The devices involved include Insignia and Nexus pacemakers, Contack Renewal TR/TR2 cardiac resynchronization pacemakers, and Ventak Prizm 2, Vitality, and Vitality 2 implantable cardioverter defibrillators. The company's cardiac rhythm management group recently identified a supplier's low-voltage capacitor that is not performing to expectations.

Biomet (BMET) received a federal grand jury subpoena from the anti-trust division of the Department of Justice. The company said the subpoena is related to possible violations of anti-trust laws involving the manufacturing and sale of orthopedic implant devices. Biomet said the subpoena requests documents from Jan. 1, 2001 through the present, and it believes similar inquiries have been directed at other companies in the industry .

Abbott Labs (ABT) received FDA approval for new HUMIRA Pen delivery device, a new device for administering HUMIRA (adalimumab), a treatment approved for moderate to severe rheumatoid arthritis and psoriatic arthritis.

Source: Rob Black's Healthcare Stock Report