Pharma-Karma; Avon’s Getting Knocked Out to PE Firm; 1-2-3 Hike!

Bitter pill…


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Big pharma’s least popular CEO is getting a taste of some very bitter medicine right now. Martin Shkreli, 32, arguably best known for raising the price of an HIV and cancer drug by 5,000%, was arrested today on allegations of securities fraud and is now facing charges from Brooklyn Federal Prosecutors. Shkreli’s arrest had nothing to do with his raising the price on those drugs. It just happened to work out nicely that way. Shkreli allegedly took money out of a biotech company he started in 2012 called Retrophin and used it to pay off debts that had nothing to do with that company. The company says he defrauded investors and is suing Shkreli him for $65 million, which he says won’t put a dent in his wallet. Charming, huh. Naturally, Shkreli was booted as CEO from Retrophin, yet still reigns supreme as the CEO of Turing Pharmaceuticals and KaloBios Pharmaceuticals, where shares of the company naturally sank on the news of his arrest. Shkreli increased the price of Daraprom, a drug that treats toxoplasmosis, a parasitic disease that wreaks havoc on people with weakened immune systems. The cost went from $13.50 a pill to $750 a pill. Shkreli’s greedy pricing activities incurred the wrath of many, including presidential candidates Hillary Clinton and Bernie Sanders, who will likely not be giving him any pardons should prison time figure in his future.

It’s not the Avon Lady anymore…


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Avon, the iconic company started in 1886, where women went door to door selling perfume, is getting bought up and going private. Private equity firm, Cerberus, is shelling out $605 million for a nice big chunk of Avon which, by the way, had a market cap of $1.8 billion as of yesterday. The goal of this action is to help the cosmetics company now focus more on markets abroad that have the potential to bring in way more revenue. Since 2007, shares of Avon have fallen steadily from the company’s all time high of $2.62 billion. At one point, there was an army of 600,000 Avon ladies knocking on people’s doors hawking their wares. That army has dwindled to around 400,000 salespeople and that lovely, perfectly made-up sales force has only been able to generate 14% of the company’s revenue. That’s a harsh number for a company that sells direct. Sephora, Ulta, Target and a crowd of other retailers have been able to offer great products at even greater prices making the Avon Lady’s offerings less appealing. Too bad Avon didn’t pounce on the $11 billion offer it had three years ago from rival cosmetics company Coty Inc.

In your best interest…


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It’s official. The rate hike happened and I’m guessing you hardly felt it. The hype leading up to it might have made the actual hike even seem anti-climactic to you. It did for me. In any case, let’s discuss how and if it matters to you now. For instance, do you plan on buying a home in the near future? The bad news here is that borrowing costs will likely be higher, as the rate on a 30 year fixed mortgage is now 3.94% . But the good news is that borrowing costs for buying a home fifteen years ago were almost twice as high, as rates were over 8%. It’s all a matter of perspective. The same goes for other loans and even credit card loans where rates will be a smidgen higher. But chances are, you’ll hardly notice it. Besides, rate hikes are indicative of healthy robust economies and who doesn’t like a healthy robust economy?  The one bright spot is for all you savers out there. If you like to plunk your hard-earned cash into a savings account where it could earn interest, you can now expect to earn a bit more on that money. Nothing that will brake the bank, but nothing to scoff at either.