Europe's drugmakers, under pressure from shareholders to improve sluggish returns, are taking a fresh look at debt on their traditionally unleveraged balance sheets.
AstraZeneca took the plunge decisively on Monday when it agreed to pay more than $15 billion in cash for U.S. biotech firm MedImmune in a move Chief Financial Officer Jon Symonds said would move it into permanent debt.
While the hefty price was criticised, many analysts saw the decision to embrace gearing as sign that times are changing in the pharmaceuticals industry, where cash piles have long been the norm.
"Astra are partly responding to what they are being told by the investment community, that you need to be progressively geared," David Beadle, pharmaceuticals analyst at UBS, said.
Bear Stearns analysts estimate AstraZeneca will have net debt of $7.7 billion by the end of 2007, against net cash of $6.5 billion at the end of 2006.
AstraZeneca is not alone.
More at Reuters
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