Today's Top Health Care Stocks to Watch: AbbVie, GlaxoSmithKline, and Shire

Let's take a look at today's top stories in biotech and health care. Keep an eye out for AbbVie (NYSE: ABBV  ) , GlaxoSmithKline (NYSE: GSK  ) , and Shire (NASDAQ: SHPG  ) .

AbbVie and Shire's proposed merger under scrutiny from the White House
The flood of U.S.-based pharma companies seeking foreign addresses has apparently caught the attention of President Obama and he's none too happy. According to a number of reports that surfaced late yesterday, the White House is seeking a ban on so-called "tax inversion" deals that would be retroactive in nature. In effect, the ban would apply to any deal made as of May this year. 

Although legislation addressing tax inversion looks unlikely to pass ahead of the forthcoming congressional elections, the news did send shares of AbbVie and Shire down sharply at one point yesterday. AbbVie and Shire are reportedly close to agreeing to a $54 billion merger, which would cut AbbVie's effective tax rate roughly in half. Given that Shire's share price has risen over 30% since rumors of a possible deal first hit the Street, investors are clearly worried that this political initiative could gain traction.

My view is that the White House's calls for a ban will more than likely fall on deaf ears in Congress. At the end of the day, I think it will be difficult to garner the necessary political will to tell corporations that they are not allowed to change their address if they so desire -- irrespective of their underlying reasons for doing so. By contrast, the President's desire to open a dialogue about the corporate tax rate that is ultimately driving this immigration may be a fruitful avenue down the road.  

Department of Justice looking into "pattern of corruption" at GlaxoSmithKline
Glaxo is in hot water again over its growing Chinese bribery scandal. The Department of Justice, or DoJ, is reportedly investigating whether a "pattern of behavior" exists at the British-based pharma after the company admitted that some of its employees were involved in similar scandal in China back in 2001.

Specifically, members of Glaxo's vaccine unit were reportedly bribing Chinese officials and taking kickbacks, resulting in 30 employees being fired once the illicit activity came to light. As a refresher, Glaxo is presently being investigated in the U.S., U.K. and China after a 10-month probe turned into allegations that top-level managers were bribing Chinese doctors and hospitals to increase sales. 

What's important to understand is that the DoJ could decide to increase any forthcoming penalties -- including fines, if a pattern of corruption is established. And investors definitely shouldn't shrug off this possibility, given that Glaxo already got slapped with a $3 billion fine by the DoJ back in 2012 over its marketing practices for about a half dozen drugs.

Perhaps even more concerning is how this scandal will ultimately influence sales growth in China, which has been one of the strongest emerging markets for Glaxo in recent quarters. With Glaxo set to report earnings next week, we are likely to learn more about any internal or external controls that have been put into place in order to keep this problem from creeping up yet again. So, stay tuned!  

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

 


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3032332, ~/Articles/ArticleHandler.aspx, 10/24/2014 12:10:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 16,765.28 87.38 0.52%
S&P 500 1,960.14 9.32 0.48%
NASD 4,470.84 18.05 0.41%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2014 11:55 AM
ABBV $60.09 Up +0.57 +0.96%
AbbVie Inc. CAPS Rating: *****
GSK $45.65 Up +0.29 +0.64%
GlaxoSmithKline CAPS Rating: ****
SHPG $195.99 Up +11.01 +5.95%
Shire plc (ADR) CAPS Rating: ****

Advertisement