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A breakdown of the S&P 500                                                     BUSINESS A25
index’s sectors through 2015                                                                                                                   Tuesday 12 January 2016

MARLEY JAY                                                      Shire in $32B deal for US-based Baxalta 
AP Markets Writer
NEW YORK (AP) — While the Standard & Poor’s index               LINDA A. JOHNSON               $13 billion in sales from that   Rare disease medicines
finished 2015 around where it started, the index was            AP Business Writer             category, and a total ex-        these days come with sky-
sharply divided between winners and losers. Four of             TRENTON, N.J. (AP) — Irish     ceeding $20 billion annu-        high list prices: $100,000 up
the index’s 10 sectors rose, while energy and five oth-         drugmaker Shire PLC’s sec-     ally, by 2020.                   to nearly a half-million dol-
ers lost ground.                                                ond attempt to buy Baxal-      Shire said it will give Baxalta  lars for a year or a course
                                                                ta looks more likely to suc-   shareholders $18 in cash         of treatment. While insur-
CONSUMER DISCRETIONARY: Up 8.4 percent. These                   ceed, with Baxalta’s board     and a portion of a Shire         ance companies have
stocks had by far the best year on the market. The              backing the sweetened          share for each Baxalta           won deep discounts, it’s
sector was driven higher by big gains from Netflix and          offer of $32 billion in cash   share, for a per-share price     been difficult for them to
Amazon, the only S&P 500 stocks that doubled in val-            and stock. If the deal goes    of $45.57 based on Friday’s      refuse to cover treatments
ue this year. Starbucks, Cablevision and Expedia all            through, the combined          closing price of Shire’s U.S.-   because for nearly all rare
did well. The S&P’s consumer discretionary index has            company would be one           traded stock. Shares in          disorders, there are no
risen for seven years in a row.                                 of the world’s top 20 drug-    both companies dropped           cheaper alternatives — if
                                                                makers by revenue and a        on the news.                     any treatment is available.
HEALTH CARE: Up 5.2 percent. Health care stocks rose            leader in the sizzling niche   The companies said their         The Shire and Baxalta
thanks to gains in drug companies, such as the macu-
lar degeneration drug maker Regeneron, and Botox                Irish drugmaker Shire PLC’s second attempt to buy Baxalta looks more likely to succeed, with
maker Allergan, which combined with Actavis early in            Baxalta’s board backing the sweetened offer of $32 billion in cash and stock.
the year. A wave of consolidation lifted health insur-
ers.                                                                                                                                                                      (AP Photo/Aaron Harris)

INFORMATION  TECHNOLOGY: Up 4.3 percent. Video                  of rare disease medicines.     combined hemophilia fran-        boards have agreed to
game makers Activision Blizzard and Electronic Arts             Treatments for rare diseas-    chise will provide a founda-     the deal, which they ex-
surged, while Google parent Alphabet and chip de-               es — those affecting fewer     tion for a broader hema-         pect to close year around
signer Nvidia also made significant gains. Facebook             than 200,000 Americans         tology and oncology  busi-       mid-year and save more
hit an all-time high and Microsoft reached its highest          — are a hot, very lucrative    ness. The new company            than $500 million annually.
price since 2000 as it transitioned to new leadership.          research area, with drug-      also would have strengths        However, shareholders and
                                                                makers testing hundreds        in diseases of the eye and       some regulators must ap-
CONSUMER STAPLES: Up 3.8 percent. Even though                   in clinical trials. The surge  gastrointestinal and endo-       prove it.
shares of Wal-Mart had their worst year in four de-             is driven by a combination     crine systems.                   Baxalta spun off last July
cades, consumer staple stocks edged higher on                   of tax breaks, the lure of     Shire’s lead product is at-      from Deerfield, Illinois-
gains from Spam maker Hormel, Monster Beverage                  ultra-high drug prices, sci-   tention deficit hyperactiv-      based drugmaker Baxter
and Corona distributor Constellation Brands. The $54            entific advances such as       ity disorder drug Vyvanse.       International Inc.
billion combination of Kraft and Heinz also helped the          the mapping of the human       Baxalta’s portfolio includes     Shire promptly made an ini-
sector.                                                         genome and advocacy            hemophilia treatment Ad-         tial run at Bannockburn, Il-
                                                                groups for patients raising    vate, and it’s developing        linois-based Baxalta, which
TELECOM: Down 1.7 percent. Shares of Frontier Com-              money to entice small drug     treatments for sickle cell       then rejected that $30 bil-
munications and CenturyLink tumbled this year, coun-            developers to research         anemia, cancer and pso-          lion all-stock bid as too low.
tering a small gain from telecom giant AT&T and a               treatments for their condi-    riasis.                          Shire said its latest offer —
10-percent jump for Level 3 Communications.                     tion.                          Just a week ago, Baxalta         which includes an infusion
                                                                Meanwhile, there’s an on-      agreed to pay Danish bio-        of cash — represents a pre-
FINANCIALS: Down 3.5 percent. Financial stocks                  going wave of drugmakers       tech company Sympho-             mium of nearly 38 percent
slipped as losses from Goldman Sachs, Berkshire Ha-             combining to increase rev-     gen A/S up to $1.6 billion       to Baxalta’s share price
thaway and student loan processor Navient can-                  enue, quickly boost profit     for rights to jointly develop    before Shire announced its
celed out gains from E-Trade Financial and property             by trimming overlapping        six experimental cancer          previous bid. Baxalta share-
and casualty insurer Chubb. Investors expected the              jobs and other expenses,       medicines.                       holders would end up with
Federal Reserve to raise interest rates this year, but it       and narrow their focus to      “The bigger picture for          about 34 percent of the
waited until December to do so. Higher interest rates           diseases where they have       Shire is the need to diver-      combined company.
mean banks can make more money on loans.                        the most expertise.            sify away from an uneven         The companies said they
                                                                Shire and Baxalta Inc. said    pipeline of products to-         will maintain the tax-free
INDUSTRIALS: Down 4.7 percent. The strong dollar and            during a Monday confer-        wards a new emphasis on          status of Baxalta’s spinoff
a slowing global economy, particularly in China, hit in-        ence call that their com-      rare diseases and biotech,”      from Baxter. They expect
dustrial stocks. Engine maker Cummins, railroad oper-           bined company will draw        wrote Joe Stelzer, manag-        an adjusted tax rate for the
ator Union Pacific, machinery maker Caterpillar and             65 percent of total revenue    ing partner at UK deal ad-       combined company of 16
truck maker Paccar all pulled the sector lower.                 from rare disease treat-       viser Cavendish Corporate        percent to 17 percent by
                                                                ments. They expect about       Finance.                         2017. q
UTILITIES: Down 8.4 percent. Utility stocks are seen as
stable investments that pay steady dividends, and
the utilities sector had risen five out of the last six years.
With interest rates about to start rising, investors sold
utility stocks this year.

MATERIALS: Down 10.4 percent. The prices of gold,
silver and copper slid to six-year lows in 2015 as the
global economy cooled. That battered stocks of min-
ing and metals companies like Freeport-McMoRan
and Alcoa as well as glass container maker Owens-
Illinois and fertilizer maker Mosaic.q
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