AstraZeneca Plc (AZN) suspended share buybacks as the board and new Chief Executive Officer Pascal Soriot review strategy at the U.K. drugmaker, prompting renewed speculation that the company will embark on larger takeovers.
The decision to stop repurchasing shares gives the drugmaker more flexibility to undertake a big acquisition, said Brian Bourdot, an analyst at Barclays Plc’s investment-banking unit in London. Under Soriot’s predecessor, David Brennan, AstraZeneca stuck to smaller purchases and licensing agreements to replenish sales as its best-selling drugs lose patent protection and face generic competitors.
AstraZeneca has repurchased $2.3 billion of stock this year, compared with an initial target of $4.5 billion, the London-based company said in a statement yesterday. The company confirmed its forecast for profit excluding some items this year of $6 to $6.30 a share.
“It’s a bit of a surprise that they changed course mid- year, but a new chief executive likes to take control and see what the options are,” Bourdot said in a telephone interview. “It would increase their ability to do a deal, that’s something we have to bear in mind.”
AstraZeneca is undergoing its annual strategy review, and has said it plans to announce the results in January, when it reports 2012 earnings. The company also will provide a forecast for 2013 at that time, according to today’s statement.
“As I assume my new responsibilities at AstraZeneca, I believe this is a prudent step that maintains flexibility while the board and I complete the company’s ongoing annual strategy update,” Soriot said in the statement.
Soriot, 53, took over yesterday at AstraZeneca. Brennan stepped down June 1 after setbacks in drug research.
Under Brennan, AstraZeneca focused on paying dividends and buying back shares to provide a return for investors while the company waited for experimental drugs to make it to the market and boost earnings. Brennan told investors not to judge the company by its earnings as it went through patent expirations on some the company’s key drugs.
Brennan said repeatedly the company wouldn’t do any deals on the scale of AstraZeneca’s purchase of MedImmune Inc. in 2007 for about $15.2 billion. Analysts criticized the company for overpaying for MedImmune. Since then, the company has done only one acquisition of greater than $1 billion, the purchase of Ardea Biosciences Inc. for $1.1 billion this year.
Repeated failures in drug development undermined that approach, and Brennan retired this year. AstraZeneca pays an annual dividend equal to 6.2 percent of the share price, the highest yield among the world’s 10 biggest drug companies. Last year the company paid out $3.68 billion in dividends, according to data compiled by Bloomberg.
Canada’s Wi-Lan to Acquire Patent Portfolio From Alvarion
Wi-Lan Inc., a Canadian patent-licensing firm, acquired a patent portfolio from an Israeli provider of wireless access solutions.
Tel Aviv-based Alvarion Ltd. said in an Oct. 1 statement that it sold a portion of its patent portfolio to Wi-Lan. Terms of the sale included $8.5 million at closing, with the balance of the total selling price of up to $19 million due after the transaction is approved by Israel’s Office of the Chief Scientist.
Alvarion received a royalty-bearing license for the portfolio it sold, the company said in its statement. Specific patents that were sold weren’t identified by the Alvarion, which also didn’t say how many patents were involved in the transaction.
Alvarion President Hezi Lapid said the sale is “an important milestone in our turnaround plan,” to bring cash into the company without undermining future growth.
Wi-Lan has filed more than a dozen patent infringement cases since 2007, mainly against high technology companies in the computer and telecommunications sectors, according to Bloomberg data.
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Kraft’s Cadbury Wins Ruling in Nestle Suit Over Color Purple
Kraft Foods Inc. (KFT)’s Cadbury unit won a trademark case brought by Nestle SA (NESN) over purple packaging for chocolate, after a London judge found the color was distinctive to the maker of Dairy Milk bars.
Nestle, the world’s biggest food company, challenged a trademark ruling from December 2011 covering chocolate bars and drinks, saying a color shouldn’t be protected.
“The evidence clearly supports a finding that purple is distinctive of Cadbury for milk chocolate,” Judge Colin Birss wrote in rejecting Nestle’s appeal. Cadbury has used purple for its Dairy Milk bars since 1914, he said in yesterday’s ruling.
Kraft became the world’s largest producer of chocolate candy when it bought Cadbury, based in the London suburb of Uxbridge, in 2010. The company had a 20.2 percent share of the Western Europe chocolate confectionery market in 2011, according to Bloomberg Industries data. Nestle, which makes KitKat and Baby Ruth bars, has an 11.1 percent market share for the region.
The dispute dates back to 2008, when Vevey, Switzerland- based Nestle opposed Cadbury’s initial application for a color trademark.
Yesterday’s decision is a partial victory for Nestle as it “protects our brands by further limiting the range of goods for which Cadbury’s application may be registered,” Nestle spokesman James Maxton said in an e-mailed statement.
Birss said the trademark wouldn’t apply to boxes of chocolates, or other products such as white or dark chocolate. “In my judgment it would not be right to say that the color purple is distinctive of chocolate generally.”
Cadbury said that the ruling “allows us to register as a trademark and protect our famous color purple across a range of milk chocolate products.”
The “color purple has been linked with Cadbury for more than a century and the British public have grown up understanding its link with our chocolate,” the company said in an e-mailed statement.
Dominican Republic Mulls Next Step in WTO Dispute With Australia
The Dominican Republic said it held consultations with Australia over its World Trade Organization complaint about Australia’s measures mandating the plain packaging of tobacco products and “remains concerned that Australia’s measures are not consistent with its WTO obligations regarding intellectual property rights and trade in goods.”
The Dominican Republic said in a statement yesterday that it will “now carefully consider the next steps in its dispute.”
Music Industry Official Calls for Jamaican Reggae Trademark
Jamaica needs to establish a trademark for its indigenous reggae music, an official of the Jamaica Reggae Industry Association said at a copyright-management workshop co-sponsored by the World Intellectual Property Organization and the Jamaica Intellectual Property Office, the Jamaica Observer reported.
Charles Campbell, vice chairman of the reggae group, said that it’s important to “set the record straight” that the island country is the birthplace of reggae, according to the Observer.
He said European bands are using token Jamaican musicians “so they can give the illusion to the marketplace that this is authentic reggae,” the newspaper reported.
An unnamed workshop attendee differed with Campbell, saying that if performers from other countries want to play reggae music “I think it is a benefit to us because Jamaica is a small pond as it relates to reggae,” according to the Observer.
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Facebook’s Zuckerberg, Russia’s Medvedev Talk IP Issues
Medvedev told Zuckerberg that the right to set limits on intellectual property belongs to owners, according to Voice of Russia.
The prime minister said the use of new forms of communication such as the Internet must be balanced with the traditional approach to copyright, Voice of Russia reported.
Zuckerberg told Medvedev that Menlo Park, California-based Facebook, the world’s largest social-media site, is so serious about intellectual property rights that it has invested a great deal in copyright protection, according to Voice of Russia.
Japan’s New Copyright Infringement Penalties Opposed by the Bar
In response to requests from the Recording Industry Association of Japan, lawmakers enacted punishments of as many as two years in prison or fines of up to 2 million yen ($25,700) for copyright infringement, according to the BBC.
The lawyer’s group issued a statement saying that the damage done by private individuals who download content without permission is “highly insignificant” and that imposition of criminal penalties “must be done very cautiously,” the BBC reported.
The music-industry group has estimated that the ratio of illegal downloads to legal ones in Japan is 10 to one, the BBC reported.
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Sheppard Mullin Expands IP Practice With Hire From Foley
Sheppard Mullin Richter & Hampton LLP hired Laura L. Chapman for its IP practice group, the Los Angeles-based firm said in a statement.
Chapman, a litigator, joins from Milwaukee’s Foley & Lardner LLP. She has represented clients in trade secret, non- compete, employee and customer-solicitation, patent, trademark, false-advertising and copyright cases.
Holmes Weinberg Snares Ex-Baker & McKenzie Partner Krasny
Krasny, who joins from Baker & McKenzie LLP, has also previously practiced at Chicago’s McDermott, Will & Emery LLP. Her area of IP expertise is transactional, with an emphasis on trademark law and licensing.
She has an undergraduate degree from Vassar College and a law degree from Northwestern University.
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