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Looking at the news, Met Sarah shares tumbled after Noboode nord Dick's declined to further raise its offer for the US maker of an experimental weight loss drug, bringing a bidding war with Pfizer to an end.
I like the good bidding war. Being a former.
Banker, Sam Fazzelli joins US here director of research for Global Industries. He covers all the healthcare stuff for Bloomberg Intelligence.
He's based in London.
So how good is this Met Sarah company? Sam and their drug? How good is met Sarah? Because boy, it seemed like everybody wanted a piece of it.
Yeah. So, Paul, before this last week, sorry, I've been off and you know what happens to your brain when you're off for a few days. Before last week, which is called we had the obesity week right where my colleague mug Show was at. There was a little bit of confusion around how good their data was, how good their assets were in the obesity space, and some questions about can they really be dosed once a month if people wanted to do that. Do we really know what
the side effect profile is like? Given the way that disclosed so far, and of course last week you cleared most of it up. The side effect profile is the same as most of these GLP wilogy. You get some nausea, in some tough cases, you get some vomiting, but those are early on and they get out of the way if you can withstand them. You seem to get the benefit and it seems to work pretty well as a once monthly drug, but there's always more wood to be chopped.
You know what these things are like. So the assets look great, they're competitive. Adfiser just stood this ground and
put the bid up. And of course I think what Clinch did was what we'd be going on for ages about for the past ten days or twenty days about, is that Nova's deal had the risk of not being able to pass due to competition competition issue with FTC issues, and it sounds like the FTC had had given Metzera call saying look, if you go with that there is a risk you won't close, so do whatever you think is the right thing for your shareholders. And they did in the end and find as it did a bit spit right.
So Novo Nordisk one in a way in that Vizer is paying up more. Does that actually work in Nova Nordisks favor or does it? Is it still as desperate as it was before to look for some new catalysts in the obesity market.
I mean, I'm not going to call Novo desperate. I think they have assets in there. I think they wanted to add some more options to their their sales reps bags over time, so I wouldn't call them desperate, but they're obviously by going after this, they did say that we need more assets in our bang so and Lily wasn't in the game. So it just gives them. That gives you that flavor that they are and I think
the market's telling you that. Look at the divergence of the share price performance of Lily versus never noticed that there's the market favoring the drugs that Lily has got on the market today and to compete they needed to get some more. So I think this is not the end for novo at all in this space. There's lots of other interesting obviously assets coming up with different mechanisms.
That's the thing that I think the company is now going to have to think about rather than trying to go after the same mechanism all the time.
So, Sam, all these big, big cap pharmaceutical companies that you've covered for decades, I kind of always thought they were big diversified portfolios of lots of different drugs and therapeutics and you know, but Bay, when I look at your stocks this year, it seems like there's halves and have nots. If you have obesity exposure, the stocks up, and if you don't, they're down. Is that kind of how your world's evolved into over the last several years.
I would just give you one little caveat to the Astrosenicasenica. I think it's doing fine. And then they have an obesity asset, but it's not their major game. Their big plays in oncology cardiovascular is there and they're adding it to it. So, yes, obesity the has been the talk of this this past twenty twenty five. I think you'll still be the talk of twenty twenty six. But there's
a lot more going on in pharma neuroscience. Diseases of the brain, diseases of mental health are getting much more attention. Cardiovascular aside from obesity, is getting quite a lot of attention in heart to treat hype atension, et cetera. I have to tell you, I don't think there's an area, perhaps antibiotics set aside, that is not getting a significant amount of progress across some farmer company somewhere.
Is what happened with Metsara, no Nordisk afisor an unabashed victory for Eli Lilly. I mean, does it just kind of keep on moving forward or does any of this kind of hurt Eli Lilly's market position.
No, I mean, at the end of the day, there'll be multiple players in this space as that are now too at least, and I think Eli Lily is currently very well placed with the assets that they have today to compete, and they're showing that they're competing very very effectively and in some cases winning market share from Noma, not disc.
Sam got about thirty seconds left. What's that you have a little hindsight here, President Trump threatening medical funding at.
The university level.
What's the updated there with the status of that.
Yeah, it seems to be that some universities are getting some reprieve from general funding issues, but medical funding is something that I keep scratching my head on. I don't understand why you would want to cut off funding to research and funding to medicine in general, because that is a major driver of economic boom in the US. And it's not just medicine, it's also stem I don't understand it.
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Man Deep Singh just barely made it under the wire to get here to talk to us today. Then I was going to give him a hard time, but then I remember he has like five other jobs. He's like senior research channels covering technology. He manages a bunch of people.
He's also updating the AI tech guide, that that slide that you're always talking about.
You know, all right, we'll cut a break here. Many Deep sing joints us here. He's our senior techauist the Bloomberg Intelligence managing it's like hurting it.
You know, a group of cats.
And you're managing research channels because they, by definition, they don't want to be managed. You know, Taiwan semiconductor manufacturing, we don't pick attention to this one.
It's chips and stuff like that. That's not a lot of fun.
But this is interesting.
They reported some numbers slower growth, and I think for those that are concerned about the growth of this AI juggernaut that we've all been on over a couple of years, you're wondering does slow and growth at Taiwan Semi confector mean anything for the industry? Written large, Andy, what do you think when you saw the Taiwan Semiconductor numbers.
I mean, Taiwan Semi is unique because they give you monthly numbers. So all of our companies report on a quarterly basis. And when I look at Taiwan Semi's quarterly results, they had over thirty percent growth. Gave a guide where AI would be growing, you know, almost fifty percent plus
over the next five years. And so if you know this deceleration is happening for a reason, you know I would attribute it to the diversification of their business, because you have to remember Apple is more than twenty percent of their revenue and video is close to twenty percent now, and then they also have some auto's revenues, some analog business.
So what is happening right now is everyone is putting their dollars in AI capex, but then they have to take away spending from elsewhere, and so the non AI piece of the hardware spend that seems to be slowing down, although we haven't really seen that. Even with PC sales things seem to be steady. But that could be one reason I can think of in terms of why the monthly number was slightly weak, And there could be seasonality
as well. I mean, this is a monthly number. Could happen that the next two months actually are above thirty percent, and then the overall quarter may still look solid.
Very good point. And just to recap the numbers, a sixteen point nine percent increase in October sales, which was on track with analyst estimates, but that is the slowest pace in about eighteen months. Well, I keep reading how TSMC is constrained by limited capacity, so if it wanted to, it would want to actually have higher sales. It's just physically limited.
Well limited capacity again on the AI side. Okay, so you know TSMC does one hundred and twenty billion dollars run rate business in a year, so out of that AI is still fifteen percent, you know. And so from that perspective, not everything that TSMC manufacturers is at the cutting edge. And then you can slice it by leading versus you know, some of the trailing notes. So from that perspective, the utilization is far higher in terms of the leading notes versus some of the other notes that
they manufacture on. And it could happen that, you know, because of the lower utilization they're not seeing as much customer orders flow in. And look, I mean it's hard to say for sure, given you know the book of their business and how many customers they have, and for some customers, they're still the only game in town. You know.
So TSMC makes custom chips for companies that order it from TSMC. It's a manufacturer overall. We know that all these big tech companies in the US are starting to turn on their own capabilities of making their own chips. Is that competition or is that out of necessity? I mean, does that take away market share from TSMC down the road.
I mean, look, if Intel is successful in terms of reviving itself on the manufacturing side, and that's what everyone is hoping, you know, with the initiative with the government taking a ten percent stake Intel, that the fab side really gets a lift in terms of other companies using Intel fabs to manufacture chips. That's when you got to
be worried about TSMC. But for now, there is nothing on the horizon where you think and Open Ai or any of these chip companies is going to go to Intel for manufacturing their chips.
And TSMC marketcap one point five trillion, stock up fifty five zero percent this year.
Maybe I should pay a little more attention to this one. What do you think?
In a related story in Nvidia, more Bloomberg News reporting these people are everywhere in Nvidia, chief executive officer Jensen Wang said he had asked Taiwan Semiconductor Manufacturing for more chips supplies as artificial intelligence demand remained strong.
So there you go. I mean, I mean, that's hey, is this thing slowing down? Well, not the Gensen Wong.
The Blackwell ramp up is actually accelerating. And if all the hyperscalers are telling you they're raising their capex for twenty twenty six and it's going to be another fifty percent plus year. They need more TSMC capacity, and Nvidia needs more TSMC allocation because TSMC can allocate to anyone outside of Nvidia as well. So from that perspective, you can see how much Nvidia cares about TSMC capacity.
Let me ask a dumb question.
I used to cover Taiwan equities when I worked in Hong Kong, and there are two big companies in Taiwan, TSMC and UMC United Microelectronics, and it feels like TSMC just ran away with it and UMC is kind of a shadow of its former self. Is there anyone any company with in Taiwan that can really compete or even hope to compete against TSMC?
Not right now, and especially when it comes to leading notes. I think that's where our TSMC talking about two nanometer. I mean, we have seen why Intel has struggled in the last five years because they are not able to make the note transitions even though they are a leading
note manufacturer. So from that perspective, I mean TSMC, it feels like they have an unassailable mode, and not just in terms of manufacturing, but also their efficiency when it comes to using these semicap equipment tools, like they are probably the best in terms of the leverage they have shown in terms of the useful life of these tools that other manufacturing companies haven't been able to show.
All Right, got about a minute and a half left. Instead of me asking a dumb question, why don't I just say, Hey.
What are you and your keem working on? What's the next cool thing we need to be we're reading about from you guys.
I mean, we are in the process of updating our GENII numbers and they are going up for twenty twenty six. And also there's a heavy emphasis on data centers. So our next big report our dashboard is going to be on data center utilization, data center capacity editions. Everyone is talking in terms of gigawatts, so opening I said, they'll be adding thirty gigawatts over the next five years. Well, we want to track overall gigawats from all these vendors, Microsoft, all the Hyperscaler.
Do we have a utilities analyst?
We do?
Who is that?
Well, I mean it's covered by multiple people. Craw Barnett and because.
Guys, those guys become front center. I mean, do we have the grid to power all this stuff?
I mean everyone has called that power. In fact, right now, the consensus is your power is the biggest constraint, even more so than the GPUs, which was the case for the past three years.
So it's always going to be something.
Yeah, all right, And how many analysts aren't covering like technology browding defined for BI We're close to twenty people, twenty people globally, right, They're not just stuck in New York everywhere?
Right there? You need that stay with us.
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Let's head over now to company news, because we do still have companies reporting earnings, and Tyson is the latest to do so. Tyson of course reporting results today and it looks like we had a fourth quarter adjusted earnings for share Beat. And Jennifer Bartashis is joining us now.
Jen Covers Senior she's the senior retail staples and packaged food analysts for us here at Bloomberg Intelligence, and Jen, you know, we think about Tyson, I think about chicken right away, and hired demand for chicken certainly was a factor that helped fourth quarter results. But beef is going to be a problem on the road, isn't it.
Well, it's an interesting thing because obviously Tyson has been doing very well with the chicken business. They've invested in the last couple of years and improving their operations and we've seen that come through with a better margin, better operating usage, and that sort of thing. But when we look at the guidance for next year, over half of their adjusted operating income is expected to come from chicken. And for a diversified protein company, that's putting a lot
of eggs in one basket, so to speak. And so you know it, it's doing well. There's there's a lot of momentum behind chicken in general, but Tyson is going to be very dependent on the continued success of that segment to hit its guidance for next year.
Talk to us about the cattle herd in this country, how does that work here? I mean, prices are so high, and I thought, for like a lot of commodities, when you see a price, you know, move materially higher, it brings on more supply. But I guess it's a little different in the cattle business. What's your understanding.
Yeah, it's a little bit harder in the cattle business. You know, you have to remember that raising cattle is a it's a capital intensive activity, and so there have been a lot of things that have held ranchers back from increasing the size of their herds. We've had high interest rates because a lot of them have to borrow in order to rebuild herds. We've had drought conditions, especially in the West and in the South, which make it difficult to commit to raising more animals if your land
can't sustain them. And so those are some of the kind of structural impediments that have really held us back from what we would typically at this point have expected to see some rebuilding of those herds already. You know, Tyson says they see a couple of indicators in the Northwest and sorry in the Upper Midwest that there's some some heifer retention coming that means that cows are not being sent to slaughter, but it's not enough to really
move the needle. So from our estimate, we're not looking at a meaningful change in supply until twenty twenty eight, So you know, expect high beef pace beef prices to continue.
Yeah, okay, so not great news if you're a hamburger lover. And it's because these consumer beef prices that are at record highs is what prompted President Trump to ask the DOJ to investigate the meat packing industry. He is blaming majority foreign owned companies for driving up these beef prices. Jen, how do you think about this?
Well, you know, when we look at this, I mean, this seems like it's more of a political maneuver than actually based on anything from a market perspective. At this point we will see what the dj comes up with and what they actually share, but this seems to be looking for a rationalization for high beef prices versus actually understanding what the market fundamentals are. And the other thing you have to remember is that we import a huge amount of beef, especially for ground beef, from Brazil, and
we have tariffs on that. So part of the part of the government's own policy is contributing to the higher beef prices, but that's not part of this investing at all.
All right, So what's next for Tyson is this, I mean, are these kind of companies are they how much did they have in their control because they don't have control of herd sizes and bird flus and things like that, whether the weather exactly is how do investors kind of invest in a company like Tyson's.
Yeah, you really have to look at you know, how how are they controlling what they can control? And so that that comes down to their operations. Are they generating the efficiency they need to out of their plants? You know, are they operating at capacity? Do they still have excess capacity to fill? It really comes down to operational execution in this kind of backdrop when there are a lot of unknown variables that can impact supply. But ultimately, you know,
supply at least for chicken does look pretty good. It looks pretty solid. So if all things go well, you know, Tyson should be in a position to be able to hit that guidance.
Before we let you go, Jen, what does pricing for turkeys look like as we get closer to things.
Getting Yeah, you know, turkey has been hit harder by avian flu than chicken. And so if you're talking about a frozen turkey, you're gonna be fine. Those turkeys have been in frozen storage for quite a while. They'll be ready to go. If you're more interested in the fresh bird, your price is probably going to be a little bit higher this year than it was last year.
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