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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