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

Today's top biotech and health care stories.

Jul 17, 2014 at 8:45AM


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
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George Budwell has no position in any stocks mentioned. The Motley Fool recommends Baxter International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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