How the Rudds profited from Janette Howard’s cancer scare
Stephen Mayne writes:|
Feb 22, 2007 12:00AM |EMAIL|PRINT
The market is in awe of CSL’s stellar profit figures released yesterday and The Australian’s business commentator Matthew Stevens attributed some of the upsurge to Tony Abbott running foul of our first lady:
CSL shareholders can thank, in part, federal Health Minister Tony Abbott and his department’s staggering rejection of a plan to vaccinate Australian schoolgirls against cervical cancer. The Prime Minister’s understandably keen intervention in the CSL approval process (wife Janette is famously a survivor of cervical cancer) resulted in a national immunisation campaign starting 12 months ahead of CSL’s schedule.
Which means income from Australian sales of anti-cancer drug Gardasil will begin flowing before the financial year’s end. Royalty income from Gardasil generated $21 million over the first half. It will more than double by year’s end and that is really just the start of what will be at least four years of high-margin income from a wonderful Australian innovation.
And which family has CSL as the largest shareholding in a $1.2 million portfolio? The Rudds, of course.
If the family bought their 2,270 CSL shares from the Keating government for $2.30 in the 1994 float, their paper profit would be a tasty $170,000. The stock rocketed $7.31 to a record high of $77.42 yesterday.
Regardless of when they bought in, it is now utterly inappropriate for the Rudds to have any interest in CSL, which enjoys a lucrative government-sponsored plasma monopoly. This has been subjected to adverse Auditor General reports and is meant to be unwound under the US free trade agreement, although the various Labor states are vigorously rejecting such a move.
The timing, and terms, of the deal are extraordinary. The Australian Red Cross Blood Service – which collects plasma from donors, sends it to CSL for fractionation, and distributes the end plasma products – had failed to meet its collection targets in 2005-06. And yet, despite record demand for products such as intravenous immunoglobulin (IVIg), the NBA has signed away up to 6.6 tonnes of plasma – around 6600 litres – to help a private company improve its product range.
The fractionation contract alone is worth $138 million to CSL and its rivals in Europe and the United States argue they could match, if not better, the service provided by CSL.
Tell Therese and the kids to sell, Kevin, as this is a terrible look. And don’t even think about transferring the holding into a blind trust.