WEBVTT - M&A, Weight Loss, and Tesla 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.640 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.279 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market movin news. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.040 you listen to podcasts, and at Bloomberg dot com, Slash podcast, 0:00:55.440 --> 0:00:58.800 at Emma Go m Go, and I'm just clicking on 0:00:58.840 --> 0:01:02.320 the time. Series is a terrible year for MNA, I mean, 0:01:02.400 --> 0:01:04.920 less than three and a half trillion. You compare that 0:01:04.920 --> 0:01:06.640 to twenty twenty one, which was a banner year of 0:01:06.680 --> 0:01:09.400 about six and a half trillion of deals done. I mean, 0:01:09.440 --> 0:01:12.000 this is the weakest year since twenty thirteen. How about 0:01:12.000 --> 0:01:14.920 twenty twenty four any better? It's check in with Ted Smith, 0:01:14.959 --> 0:01:17.000 co founder and president of Union Square Advisors. 0:01:17.000 --> 0:01:17.959 Of course is highlight of. 0:01:17.880 --> 0:01:20.520 His career when he's a managing director of Credit Swiss 0:01:20.520 --> 0:01:22.640 First Fauston. I think we crossed passed there back in 0:01:22.640 --> 0:01:25.119 the day. Hey, Ted, talk to us about twenty twenty three. 0:01:25.200 --> 0:01:28.200 What did you see in the marketplace and more importantly, 0:01:29.160 --> 0:01:30.640 what are you guys in the M and A biz 0:01:30.640 --> 0:01:31.880 thinking about twenty twenty four? 0:01:33.560 --> 0:01:35.959 Morning, Paul, Great to be with you again. Thanks well, 0:01:36.000 --> 0:01:37.679 you hit the nail on the head. It certainly has 0:01:37.720 --> 0:01:39.200 not been a great year for M and A in 0:01:39.240 --> 0:01:43.120 twenty twenty three, off almost half from the peaks of 0:01:43.480 --> 0:01:45.800 twenty twenty one. We saw a lot of fits and 0:01:45.800 --> 0:01:50.280 starts this year. Heard the earlier commentary with Danielle about 0:01:50.280 --> 0:01:53.000 where things are with the FED. That certainly put some 0:01:53.040 --> 0:01:55.400 freeze on the market. The higher cost of capital for 0:01:55.520 --> 0:01:59.520 longer meant that some folks stayed on the sidelines. Also, 0:01:59.600 --> 0:02:02.400 as the large corporate acquirers were thinking about whether they 0:02:02.400 --> 0:02:05.600 wanted to get back into the market or not. Took longer, 0:02:05.640 --> 0:02:07.480 frankly than we thought at the beginning of the year, 0:02:07.560 --> 0:02:10.840 so we started to see some green shoots really in 0:02:10.960 --> 0:02:14.080 late late summer and right after Labor Day. We do 0:02:14.120 --> 0:02:16.799 think activity is picking up now and we'll continue into 0:02:16.880 --> 0:02:21.080 twenty twenty four, but we were delayed by about six 0:02:21.120 --> 0:02:23.640 months from our beginning of twenty twenty three forecast on 0:02:23.680 --> 0:02:25.200 when we thought M and A would start to pick 0:02:25.280 --> 0:02:28.200 up from twenty twenty two, which itself was significantly down 0:02:28.240 --> 0:02:29.839 from twenty one and ted. 0:02:29.880 --> 0:02:33.200 When you look at though question around regulatory uncertainty, it 0:02:33.240 --> 0:02:35.440 seems like the FTC is pushing back against everything. Is 0:02:35.440 --> 0:02:37.760 that something that's top of mind at all? 0:02:37.960 --> 0:02:38.680 It certainly is. 0:02:38.720 --> 0:02:40.919 I mean, we think about it, and obviously acquirers think 0:02:40.919 --> 0:02:43.320 about it. Such a big part of the market though 0:02:43.360 --> 0:02:47.799 today is about private equity as acquirers, not just the strategics, 0:02:48.000 --> 0:02:51.480 and they typically are not as wound around the issue 0:02:51.520 --> 0:02:54.639 from a regulator's perspective. And also we've seen an approach 0:02:54.919 --> 0:02:57.400 for a long time from the large strategic acquirers of 0:02:57.760 --> 0:03:01.360 asking forgiveness rather than permission to do a number of 0:03:01.360 --> 0:03:04.320 these deals. So we think that attitude will continue to pervade. 0:03:04.560 --> 0:03:07.640 The FTC clearly and the DOJ clearly want to flex 0:03:07.680 --> 0:03:11.440 their muscles here amongst the really large tech acquirers, and 0:03:11.480 --> 0:03:13.680 we think that will continue to be the case. On 0:03:13.720 --> 0:03:15.800 the other hand, there's a lot of other acquirers out 0:03:15.840 --> 0:03:18.160 there other than the Magnificent seven that we think don't 0:03:18.160 --> 0:03:21.000 get as much scrutiny and will probably rise up and 0:03:21.080 --> 0:03:22.240 participate in more m and. 0:03:22.200 --> 0:03:25.520 A ted the era of free money is over. We've 0:03:25.520 --> 0:03:28.040 got a ten year trading north of four percent here, 0:03:28.080 --> 0:03:31.840 So the cost of debt capitals higher for acquirers. How 0:03:31.919 --> 0:03:36.320 is that impacting kind of activity, structures, that kind of thing. 0:03:37.320 --> 0:03:40.560 Yeah, we definitely saw a little more structure, both in 0:03:40.640 --> 0:03:44.080 terms because of the cost of debt, but also just 0:03:44.280 --> 0:03:48.839 uncertainty in the market generally. But the reality, at least 0:03:48.840 --> 0:03:52.960 for technology companies where USA we spend our time, is 0:03:52.960 --> 0:03:54.640 that the cost of debt is still cheaper than the. 0:03:54.640 --> 0:03:56.000 Cost of equity in most cases. 0:03:56.080 --> 0:03:58.440 So while it's more expensive than it was a year ago, 0:03:58.600 --> 0:04:03.000 two years ago, the total explosion in private credit that 0:04:03.000 --> 0:04:05.640 we've seen over the last couple of years has really 0:04:05.680 --> 0:04:09.120 made debts still a possible source of capital and meaningful 0:04:09.120 --> 0:04:11.760 source of capital. We just completed a four hundred and 0:04:11.800 --> 0:04:15.040 sixty million dollar transaction that was exclusively done in the 0:04:15.040 --> 0:04:18.120 private credit market for a large private equity firm in 0:04:18.120 --> 0:04:19.440 one of its portfolio companies. 0:04:19.440 --> 0:04:20.680 So it's available. 0:04:20.920 --> 0:04:23.400 Yes, it's more expensive than it has been, but we 0:04:23.440 --> 0:04:26.359 continue to see the private credit markets being really active, 0:04:26.480 --> 0:04:28.080 particularly in the tech sector. 0:04:28.600 --> 0:04:31.039 Inted. I talked to IPO bankers for the bulk of 0:04:31.080 --> 0:04:33.159 my day, and they keep kind of pounding the table 0:04:33.200 --> 0:04:36.520 on valuation discrepancy. When you look at private equity buyers 0:04:36.520 --> 0:04:38.400 who are in need to return some of the cash 0:04:38.400 --> 0:04:41.640 to LPs, are they going to caveon valuation or how 0:04:41.640 --> 0:04:43.159 are those conversations going to play out? 0:04:44.080 --> 0:04:46.720 Yeah, I think it's a really good question. I think. 0:04:47.960 --> 0:04:50.480 We continue to think that the IPO market is going 0:04:50.520 --> 0:04:53.080 to be tepid going forward. I was an IPO banker 0:04:53.120 --> 0:04:55.120 for the first phase of my career, and so I've 0:04:55.120 --> 0:04:58.000 seen this up and down movie before. But we really 0:04:58.040 --> 0:04:59.960 just don't see a lot of product likely to come 0:05:00.160 --> 0:05:02.359 loose in the IPO markets. We do think those private 0:05:02.360 --> 0:05:05.400 equity buyers who do need to return capital to their 0:05:05.520 --> 0:05:09.640 LPs are more likely to pursue sales to either Strategics 0:05:09.680 --> 0:05:13.200 or other private equity firms, but far more frequently and 0:05:13.240 --> 0:05:15.479 at more volume than we'll see in the IPO market. 0:05:15.480 --> 0:05:17.719 And if they do cave on value, we think that's 0:05:17.760 --> 0:05:20.479 going to be the exception to pursuing an IPO rather 0:05:20.520 --> 0:05:21.039 than the rule. 0:05:21.360 --> 0:05:23.440 Hey, Ted, I know you guys at Union Square Advisors. 0:05:23.600 --> 0:05:25.840 You know traffic a lot in the tech space. If 0:05:25.880 --> 0:05:28.280 I go out to sand Hill Road and look for 0:05:28.279 --> 0:05:29.720 some capital, or if I just go talk to the 0:05:29.760 --> 0:05:31.800 folks out there, who are their VC folks, who are 0:05:31.800 --> 0:05:34.480 the real capital folks out there for the tech industry. 0:05:35.080 --> 0:05:37.360 What's the mood out there on sand Hill Road these days? 0:05:38.080 --> 0:05:40.760 I think it's We're glad. Twenty twenty three is almost 0:05:40.760 --> 0:05:42.560 in the rearview. Mirror is one big part of that. 0:05:43.560 --> 0:05:47.360 There continues to be a lot of focus around investment, 0:05:47.400 --> 0:05:52.280 around all things AI, although I think the irrational exuberance 0:05:52.320 --> 0:05:54.560 around that is even coming down a bit. 0:05:55.760 --> 0:05:56.120 Again. 0:05:56.480 --> 0:05:58.400 I used the term green shoots earlier about what we 0:05:58.400 --> 0:06:00.320 were seeing in M and A. We're certainly seeing a 0:06:00.320 --> 0:06:02.880 little bit of an unloosening of the purse strings in 0:06:03.000 --> 0:06:06.039 earlier stage VC, which obviously then leads to mid stage 0:06:06.040 --> 0:06:09.400 and late stage VC investing for the right companies. So 0:06:09.560 --> 0:06:11.880 I think right now the mood is we're going to 0:06:11.880 --> 0:06:13.159 get through the end of the year. We're going to 0:06:13.160 --> 0:06:15.240 take stock of where our portfolio is, but we want 0:06:15.240 --> 0:06:17.080 to put more capital to work in twenty four than 0:06:17.120 --> 0:06:18.120 we did in twenty three. 0:06:18.279 --> 0:06:20.880 And looking at twenty four, how does that timeline play out. 0:06:20.880 --> 0:06:22.960 Do we see a flurry of activity call it second 0:06:23.040 --> 0:06:26.039 quarter ahead of an election in November and elections globally, 0:06:26.120 --> 0:06:28.880 or how does that shape up in twenty twenty four. 0:06:29.240 --> 0:06:30.360 It's a really good question. 0:06:30.720 --> 0:06:32.880 It's somewhat ironic that we're sitting here talking about that 0:06:32.960 --> 0:06:34.719 the more stable year is going to be the election 0:06:34.800 --> 0:06:37.200 year than the year that we just went through, but 0:06:37.240 --> 0:06:39.280 we do think that that may be there, at least 0:06:39.320 --> 0:06:40.160 for the first half of the year. 0:06:40.200 --> 0:06:41.080 That may be true. 0:06:41.400 --> 0:06:43.600 We're working on a number of transactions where we've been 0:06:43.640 --> 0:06:45.680 in prep mode for the fall that are going to 0:06:45.720 --> 0:06:49.120 launch in January. I aspect our competitors are doing exactly 0:06:49.160 --> 0:06:50.840 the same thing. So we do see sort of a 0:06:50.920 --> 0:06:53.760 Q one Q two flurry of activity well ahead of 0:06:53.800 --> 0:06:56.080 what we've seen in twenty twenty three. And then the 0:06:56.160 --> 0:06:59.240 uncertainty that the elections always inject into the markets, may 0:06:59.240 --> 0:07:02.200 take over as we hit summer and early fall leading 0:07:02.200 --> 0:07:05.320 into the elections. As we all know, markets hate uncertainty, 0:07:05.360 --> 0:07:06.840 so we'll see some up and down on that. We 0:07:06.880 --> 0:07:09.560 may see some slowing in both the investing and the 0:07:09.640 --> 0:07:11.360 M and A life cycle as we move closer to 0:07:11.400 --> 0:07:14.000 the election, and then we may see a lot of 0:07:14.040 --> 0:07:16.240 activity post November once it's clear one way or the 0:07:16.280 --> 0:07:18.920 other which way things are going, at least in this country. 0:07:19.160 --> 0:07:21.280 And Ted, one of the things that's new to me, 0:07:21.320 --> 0:07:24.080 at least compared to when I was in your game 0:07:24.840 --> 0:07:29.680 on the street is the growth of private credit. How 0:07:29.720 --> 0:07:32.600 important is that to just getting deals done? Because we 0:07:32.960 --> 0:07:34.840 talked to a lot of private credit people and the 0:07:34.880 --> 0:07:38.119 capital is flowing into their funds like crazy and they're 0:07:38.240 --> 0:07:41.360 really really active. Talk to us about that private credit business, 0:07:41.440 --> 0:07:43.360 what it means for your M and A market. 0:07:44.360 --> 0:07:47.000 Yeah, it's today, Paul, it's north of a two trillion 0:07:47.000 --> 0:07:48.800 dollars asset class. So to your point, a lot of 0:07:48.880 --> 0:07:52.000 money has gone into it. We continue to have that 0:07:52.160 --> 0:07:54.400 be an incredible part of the work that we're doing 0:07:54.480 --> 0:07:56.640 in our capital Off of our Capital Market's desk. We're 0:07:56.680 --> 0:07:59.600 not underwriters we're arrangers, but we still have a tremendous 0:07:59.600 --> 0:08:03.040 business led by Mike Meyer, who's driving that for us. 0:08:03.840 --> 0:08:06.400 They're part of virtually every deal that we do on 0:08:06.440 --> 0:08:09.760 the financing side, unless it's a pure equity deal. And 0:08:09.800 --> 0:08:11.280 then when we're talking on the M and A side, 0:08:11.280 --> 0:08:14.280 if there is going to be a debt component associated 0:08:14.280 --> 0:08:17.240 with it, again, we'll tap a broad range of relationships 0:08:17.280 --> 0:08:19.520 in that private credit market. So it's a long winded 0:08:19.520 --> 0:08:22.040 way of saying they've become incredibly important not only to 0:08:22.120 --> 0:08:24.240 our business but to the tech business broadly over the 0:08:24.280 --> 0:08:25.040 last five years. 0:08:25.160 --> 0:08:26.600 And we don't see that dimming at all. 0:08:27.080 --> 0:08:30.120 And how does that structure play out in twenty twenty four. 0:08:30.160 --> 0:08:32.520 Are we seeing a mixture of debt being brought on 0:08:32.640 --> 0:08:35.520 in some of those cash offers? Do you see kind 0:08:35.559 --> 0:08:38.079 of earnouts being part of that? In twenty twenty four. 0:08:39.000 --> 0:08:41.920 We've seen more structure, We've seen some earnouts, We've seen 0:08:42.000 --> 0:08:45.040 other sort of bells and whistles, if you will, higher 0:08:46.040 --> 0:08:49.320 preferences in certain investments, not in every case, but in 0:08:49.360 --> 0:08:51.480 some over the course of twenty twenty three, as people 0:08:52.120 --> 0:08:55.400 evaluated being a little more risk averse. I think as 0:08:55.440 --> 0:08:58.439 we go into twenty twenty four, I heard again the 0:08:58.480 --> 0:09:01.200 great conversation about what's happening in and around the FED. 0:09:01.240 --> 0:09:04.680 As we start to see some stabilization and some easing there, 0:09:05.440 --> 0:09:07.400 we think some of that structure may fall away a 0:09:07.440 --> 0:09:11.720 little bit, but generally that market will be very active, 0:09:12.080 --> 0:09:15.360 and we will see a combination of debt capital used 0:09:15.360 --> 0:09:18.520 in cash on hand by strategic buyers and for private 0:09:18.559 --> 0:09:21.000 equity buyers who again have big checkbooks but also like 0:09:21.080 --> 0:09:24.240 to use debt to increase their returns, we think they'll 0:09:24.280 --> 0:09:26.720 be very active in doing that in twenty twenty four. 0:09:27.040 --> 0:09:29.000 Ded, thanks so much for joining us. Really appreciate getting 0:09:29.040 --> 0:09:31.080 your thoughts here At Ted Smith, he's a co founder 0:09:31.240 --> 0:09:33.800 and as president of Union Square Advisors. 0:09:35.120 --> 0:09:38.520 You're listening to the team Ken's Are Live program Bloomberg 0:09:38.559 --> 0:09:41.960 Markets weekdays at ten am Eastern on Bloomberg dot Com, 0:09:42.000 --> 0:09:45.160 the iHeartRadio app, and the Bloomberg Business App, or listen 0:09:45.240 --> 0:09:49.240 on demand wherever you get your podcasts. 0:09:49.400 --> 0:09:52.000 I'm going to go to a big Pfeiser, big pharma here. 0:09:52.000 --> 0:09:55.720 Pfizer the stock off pretty substantially today, falls to its 0:09:55.720 --> 0:10:00.480 lowest in ten years on a disappointing forecast, and I'm 0:10:00.480 --> 0:10:01.840 looking at the stock right here. We're gonna bring in 0:10:01.880 --> 0:10:04.760 Sam Fazzelli. He is the head of European Research and 0:10:04.800 --> 0:10:07.760 he's a farmer analysts Bloomberg Intelligence. He's based in London. 0:10:07.800 --> 0:10:11.120 He has a PhD. Not really good with the zoom thing, 0:10:11.200 --> 0:10:13.680 but he's pretty smart. I've been told here. So Sam, 0:10:13.679 --> 0:10:15.920 what's going on with Pfizer? These are the great, great 0:10:15.960 --> 0:10:19.600 people that brought us the COVID vaccine stocks down fifty 0:10:19.640 --> 0:10:22.320 percent year to date. It's given up so much of 0:10:22.400 --> 0:10:24.720 kind of what it gained during the COVID period. What's 0:10:24.760 --> 0:10:27.439 the story on Pfizer with the guidance they gave and 0:10:27.520 --> 0:10:28.760 kind of maybe the longer term view. 0:10:29.840 --> 0:10:30.520 Yeah, Hi, Paul. 0:10:30.640 --> 0:10:32.920 By the way, I'm fully zoomed up here, so I 0:10:32.960 --> 0:10:37.280 don't know zoom thing was. Look, I mean it's I. 0:10:37.720 --> 0:10:39.319 Literally I don't know if you've got only one left 0:10:39.320 --> 0:10:41.880 in the office. I mean, just for the people on Uh, 0:10:42.559 --> 0:10:44.520 let me see this YouTube, all right. 0:10:44.400 --> 0:10:46.560 I'm making a I'm making a phone call to somebody. 0:10:46.559 --> 0:10:47.520 This is ridiculous. 0:10:47.520 --> 0:10:49.400 It's a no, no, no, they're all they're all. 0:10:49.960 --> 0:10:52.720 They're all having tea time. 0:10:52.840 --> 0:10:54.640 Come on, now. 0:10:54.720 --> 0:10:57.960 Look, the the thing with Pfizer is that they've there's 0:10:58.000 --> 0:11:01.640 been this uncertainty since the massive boom in COVID vaccine sales, 0:11:01.679 --> 0:11:04.559 et cetera, as to what is the long term shape 0:11:04.559 --> 0:11:06.880 of this business. And you know, frankly, we've just had 0:11:06.960 --> 0:11:10.600 cut after cut after cut, and we're now being told 0:11:10.640 --> 0:11:13.520 that maybe next year, instead of the eight billion that 0:11:14.040 --> 0:11:16.640 consensus was looking for for COVID vaccines is going to 0:11:16.640 --> 0:11:20.240 be five. Maybe instead of the a five billion of 0:11:20.320 --> 0:11:22.679 packed slovid sales. 0:11:22.400 --> 0:11:24.160 Is going to be three. So you know, that's a 0:11:24.200 --> 0:11:24.880 big cut. 0:11:25.280 --> 0:11:28.400 But in reality, if you take out Covid, and you 0:11:28.440 --> 0:11:31.920 take out the acquisition they've just completed today or yesterday, 0:11:33.400 --> 0:11:37.240 the at least going forward, if you take those numbers 0:11:37.280 --> 0:11:39.920 out for twenty twenty four, you're still a couple of 0:11:39.960 --> 0:11:43.520 billion or a billion or so short of consensus. So 0:11:43.559 --> 0:11:46.520 it's not just about vaccines, it's not just about pack slovid. 0:11:46.920 --> 0:11:49.120 Business is tough for this company, which is why they're 0:11:49.160 --> 0:11:50.000 doing the deal they're doing. 0:11:51.160 --> 0:11:54.720 Sam, you mentioned the deal they're doing acquiring Cgena, a 0:11:54.840 --> 0:11:58.600 canter drug manufacturer. What could Pfiser have done or should 0:11:58.640 --> 0:12:00.640 Piser have done differently with the best fit of hindsight, 0:12:00.720 --> 0:12:03.200 it's down fifty seven percent from a December twenty twenty 0:12:03.200 --> 0:12:05.319 one peak and lost almost two hundred billion dollars in 0:12:05.360 --> 0:12:06.079 market value. 0:12:06.760 --> 0:12:09.520 Yeah, I honestly don't think it's something that I mean, 0:12:09.600 --> 0:12:13.719 clearly they could have had a more exciting pipeline, you know, 0:12:13.840 --> 0:12:16.319 if things had gone better for them in the obesity 0:12:16.360 --> 0:12:19.559 drug that they reported a week or two ago. There 0:12:19.600 --> 0:12:22.040 are quite a lot of headwinds for this company, which 0:12:22.080 --> 0:12:23.280 is again why they're doing the deal. 0:12:23.840 --> 0:12:28.000 The reality is it's just the stock is resetting to. 0:12:28.000 --> 0:12:31.360 What the facts are in the world of COVID, and 0:12:31.400 --> 0:12:36.000 it was very difficult to second guest those. Nobody knew 0:12:36.080 --> 0:12:39.240 how bad the vaccine fatigue would be when it comes 0:12:39.280 --> 0:12:44.320 to dealing with the second and third year or fourth 0:12:44.360 --> 0:12:45.160 year of boosters. 0:12:45.480 --> 0:12:47.800 Nobody knows what is going to be next year. I 0:12:47.960 --> 0:12:49.559 actually think, and I think they've said it. 0:12:49.520 --> 0:12:53.880 Themselves today, that they're being as conservative as possible on 0:12:53.920 --> 0:12:57.400 the COVID vaccine front for next year. It's they're assuming 0:12:57.440 --> 0:13:00.160 the same as this year, but the lower sales in 0:13:00.240 --> 0:13:02.520 terms of foll use for lower sales, So let's see 0:13:02.559 --> 0:13:03.400 how this pans out. 0:13:03.480 --> 0:13:06.240 Is it going to be a better year for them? 0:13:06.360 --> 0:13:08.520 Is this the low point from which guidance is going 0:13:08.559 --> 0:13:11.120 to start going up is what I think everybody's going 0:13:11.200 --> 0:13:12.760 to have to be figuring out. 0:13:12.840 --> 0:13:14.920 Yeah, and when you look at the an R function 0:13:15.280 --> 0:13:18.200 on the Bloomberg terminal professer, which is analyst recommendations, it's 0:13:18.280 --> 0:13:22.640 right as Sam was suggesting, fourteen buys, fourteen holes. The 0:13:22.640 --> 0:13:26.240 street has no idea what's going on with this name. Sam, 0:13:26.600 --> 0:13:28.160 let's broad that out a little bit. You mentioned the 0:13:28.640 --> 0:13:32.000 weight loss drugs, and that is boy if Ai was 0:13:32.720 --> 0:13:35.839 the early part of twenty twenty three's driver of the market. 0:13:35.920 --> 0:13:37.920 It seems like these weight loss drugs have been the 0:13:38.000 --> 0:13:41.480 driver for the second half of the year, big big store. Here, 0:13:41.559 --> 0:13:43.560 can you and I know you guys at Bloomberg Intelligence 0:13:43.600 --> 0:13:45.200 have done a ton of work on let's have a big, 0:13:45.240 --> 0:13:48.880 big seminal research report out on this market. Here, can 0:13:48.920 --> 0:13:50.800 you frame out kind of where we are today with 0:13:50.840 --> 0:13:53.080 these weight loss drugs and how much of a driver 0:13:53.360 --> 0:13:55.079 is it for the farmer industry going forward? 0:13:56.280 --> 0:13:58.480 Yeah, so for the industry as a whole. Let me 0:13:58.520 --> 0:14:00.760 just start with your last question. I think a lot 0:14:00.800 --> 0:14:02.520 of people are getting into the game. You know that 0:14:03.280 --> 0:14:07.400 Rash has just got announce a deal. You've got Astra 0:14:07.520 --> 0:14:10.240 Zenekos got into this. Pfizer is doing its best to 0:14:10.280 --> 0:14:12.679 stay in the game. One company that did rule themselves 0:14:12.679 --> 0:14:15.000 out is Johnson and Johnson. They said, it's two crowded, 0:14:15.080 --> 0:14:17.680 too busy, We're not interested, and they have a pretty 0:14:17.840 --> 0:14:21.520 powerful oncology business. But and then where are we going 0:14:21.560 --> 0:14:25.440 with this? With this u with these drugs. The reality 0:14:25.520 --> 0:14:28.000 is that the more we see from them in terms 0:14:28.040 --> 0:14:32.200 of the control of other obesity related side of issues, 0:14:32.600 --> 0:14:37.160 cardiovascular disease, kidney disease, and in time cancer and other 0:14:37.240 --> 0:14:41.480 types of diseases that are the results of this upsetting 0:14:41.640 --> 0:14:44.280 balance in the body, which is essentially what happens in 0:14:44.320 --> 0:14:48.640 these patients. They are what we call a constantly under 0:14:48.680 --> 0:14:52.120 a state of inflammation, which is bad. I mean inflammatory response. 0:14:52.400 --> 0:14:54.840 The whole body is under that stress when you have 0:14:55.240 --> 0:14:58.200 extra poundage around. So that's what I think. These drugs 0:14:58.200 --> 0:15:01.320 are going to be shown to continue to be powerful, 0:15:01.400 --> 0:15:03.640 but we're going to get more data, We're going to 0:15:03.640 --> 0:15:06.520 get more competitive competition coming. Prices are going to have 0:15:06.560 --> 0:15:08.840 to go up, and I'm assuming volume will go up 0:15:08.840 --> 0:15:09.400 on the back of it. 0:15:09.720 --> 0:15:12.160 And Sam, is there an indication or an area that's 0:15:12.280 --> 0:15:15.640 most similar or reminiscent to you of weight loss drugs 0:15:15.640 --> 0:15:18.080 in terms of the potential market. I'm just looking at 0:15:18.200 --> 0:15:19.960 some of the stock moves we've seen with Novo and 0:15:20.000 --> 0:15:21.560 Lily and a lot of the small caps, and it 0:15:21.600 --> 0:15:25.880 does remind me of the gold rush that was COVID vaccines. 0:15:27.000 --> 0:15:28.720 Yep. Except the COVID vaccines. 0:15:28.840 --> 0:15:32.400 You know, we were vaccinating an entire population to try 0:15:32.440 --> 0:15:35.200 and manage that pressure, and we I think we did 0:15:35.320 --> 0:15:37.320 the most countries at a pretty good job of that. 0:15:37.800 --> 0:15:40.200 But then you come back to the diseases endemic and 0:15:40.840 --> 0:15:43.040 most of the countries are now suggesting it for only 0:15:43.120 --> 0:15:46.120 sixty five plus, certainly in the UK where I am, 0:15:46.440 --> 0:15:47.440 and the reality. 0:15:47.120 --> 0:15:48.800 Is a lot of people got bored with it. I 0:15:48.800 --> 0:15:51.160 don't think people are going to get bored with obesity drugs. 0:15:51.240 --> 0:15:53.320 Some people are not going to tolerate them. Some people 0:15:53.320 --> 0:15:53.760 are not going. 0:15:53.760 --> 0:15:55.680 To be able to take them for fifty two weeks 0:15:55.800 --> 0:15:58.280 or whatever, eighty eight weeks, which was the latest data 0:15:58.320 --> 0:16:00.960 set that camera, But that doesn't matter as long as 0:16:00.960 --> 0:16:03.640 they can keep their weight down, take a holiday from 0:16:03.680 --> 0:16:05.440 the drug, come back to it. I think this is 0:16:05.480 --> 0:16:07.920 a much more sticky market than covid Vaccini's was. 0:16:08.360 --> 0:16:09.240 Yeah very quickly. 0:16:09.240 --> 0:16:09.520 Though. 0:16:09.760 --> 0:16:11.920 Is it reminiscent of kind of hepsi in terms of 0:16:12.000 --> 0:16:14.680 the fact that these drugs do require you to be 0:16:14.760 --> 0:16:16.360 on them forever? Essentially? 0:16:17.200 --> 0:16:19.360 Yeah, But again, if you remember Hipsey was a blip, 0:16:19.520 --> 0:16:22.200 we had a large rise and then everybody got under 0:16:22.200 --> 0:16:24.200 control and helps he was curative. 0:16:24.680 --> 0:16:26.400 We don't have a curative setting here. 0:16:26.600 --> 0:16:28.600 I think the best thing I'm going to equal it 0:16:28.640 --> 0:16:32.680 to potentially is if we get a highly effective Alzheimer's drug. 0:16:32.960 --> 0:16:35.720 Remember the obesity game has been in play for ten 0:16:35.800 --> 0:16:36.480 twenty years. 0:16:36.640 --> 0:16:38.160 Now we've got effective drugs. 0:16:38.320 --> 0:16:40.200 I think we might see that with Alzheimer's in the 0:16:40.200 --> 0:16:41.480 next ten to fifteen years. 0:16:41.760 --> 0:16:46.320 I mean, the headquarters for Bloomberg in London is spectacular 0:16:46.440 --> 0:16:50.040 Queen Victoria Street. It is the absolute coolest building you'll 0:16:50.080 --> 0:16:53.120 ever see or and these knuckleheads are not in the office. 0:16:53.200 --> 0:16:54.440 I'm going to make a phone call as soon as 0:16:54.480 --> 0:16:57.280 we're done here. Sam Fazzelli, head of European Research. He 0:16:57.360 --> 0:17:00.400 covers all the farmer stuff for Bloomberg Intelligence, one of 0:17:00.440 --> 0:17:03.080 the top form analysts in the city of London for 0:17:03.080 --> 0:17:04.080 Bloomberg Intelligence. 0:17:04.359 --> 0:17:07.480 You're listening to the tape Cat's are Live program Bloomberg 0:17:07.520 --> 0:17:11.119 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:11.200 --> 0:17:14.400 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:14.440 --> 0:17:17.280 You can also listen live on Amazon Alexa from our 0:17:17.280 --> 0:17:22.320 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:17:23.680 --> 0:17:26.919 Some news out on Tesla today. They're recalling two million 0:17:27.000 --> 0:17:31.240 cars to fix autopilot safety flaws. That sounds kind of important. 0:17:31.320 --> 0:17:33.840 Let's check in with somebody who knows this stuff, cold 0:17:34.240 --> 0:17:39.480 Steve Man, Global auto market research leader Bloomberg Intelligence. He's 0:17:39.520 --> 0:17:41.560 based in Princeton, New Jersey. Not in and of itself 0:17:41.640 --> 0:17:44.480 is news because for ten years he ran our Asia 0:17:44.960 --> 0:17:49.119 business for Bloomberg Intelligence. Somehow he got back into this 0:17:49.160 --> 0:17:51.920 country despite all my efforts to keep him out. He's 0:17:51.960 --> 0:17:54.160 a good man, he's a great analyst. We appreciate getting 0:17:54.160 --> 0:17:56.600 some time, and Steve, don't be afraid. You can get 0:17:56.640 --> 0:17:58.119 on that New Jersey trains and get up to New 0:17:58.160 --> 0:18:01.040 York City, the capital of the financial world, anytime you want. 0:18:01.200 --> 0:18:01.560 Will do. 0:18:01.800 --> 0:18:03.440 Thanks for joining us, Steve. What do we make here 0:18:03.480 --> 0:18:03.919 of Tesla? 0:18:04.040 --> 0:18:04.200 Here? 0:18:04.240 --> 0:18:06.399 Is this a problem? I mean just sounds like it 0:18:06.720 --> 0:18:08.680 kind of a standard auto issue. 0:18:09.359 --> 0:18:11.320 It is it is a standard auto issue. If you 0:18:11.400 --> 0:18:14.800 just look at the surface, it's two million cars. There's 0:18:14.800 --> 0:18:17.240 a lot of vehicles, it's everything they've built so far. 0:18:18.560 --> 0:18:21.000 It's it's in terms of costs, it's a minor change, 0:18:21.320 --> 0:18:26.480 it's an over the air fix. But what's really I 0:18:26.520 --> 0:18:29.919