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THE head of Novartis, Daniel Vasella, has called for regulators to look into hedge funds and the media after growing concerns about their roles during recent speculation over his company's takeover plans.
Dr Vasella, chairman and chief executive of Europe's second-largest pharmaceuticals group, stopped short of demanding new regulations.
But he expressed fears about an intensifying "systemic" problem, akin to the abuses revealed in relations between equity analysts and investment bankers during the dotcom boom.
"There are two parties that can potentially take advantage. The agents for the vendor, who can try to ramp up a share price by spreading rumours. And now you have the hedge funds," he told the Financial Times.
The comments came against the background of extreme volatility in the shares of Serono, the Swiss biotechnology group that is currently in play. The decline came after reports the company had failed to elicit bids from potential buyers.
Serono's share price shot up last November after the company confirmed it had hired Goldman Sachs to examine "strategic alternatives" -- code for a sale.
Novartis's shares dropped on widespread market speculation it was the most likely acquirer. Recently, at the group's annual press conference, Dr Vasella dampened such speculation by playing down the role of takeovers in his growth strategy.
Dr Vasella acknowledged the sensitivity of suggesting curbs on press freedom. But he said he had become increasingly concerned at what he described as deliberate misinformation.
"Frankly, I've been asking myself if the regulators should intervene. It is market manipulation that is happening now, because you have people saying things they know not to be true. It wouldn't hurt if a regulator started to look at this."
Dr Vasella, whose company spent more than $14bn on takeovers in the past year, denied Novartis was excessively acquisitive, and said internal research showed other drug makers had bought more.
But he admitted his own candour about industry consolidation and Novartis's recent record meant it was tipped regularly as a buyer, creating a challenge in terms of communications.
"The more vague you leave your strategy, the more freedom you have. The more you communicate, the more you become a hostage to fortune, and the more it can get dangerous. But saying nothing also has its price."
Under syndication arrangement
with FE
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