Originally posted by: Naustica
It seems pretty much every major drug maker is at or near the 52 week low. PFE, BMY, SNY, GSK, MRK, NVS, AZN, SGP.
Pfizer we know has problems, and I've no interest in it. I know Glaxosmithkline issued disappointing 2008 guidance and stock is down big. My wife wants me to buy it because of the over the counter diet drug Alli. From what I'm reading Glaxo has promising pipeline similar to Merck after the Vioxx so that looks attractive as does the 5% dividend. The other drug makers I'm not too familiar with other than I track the price and movement.
I guess I'm just puzzled with the downward price action on the group as a whole and more of a rant than anything. Price action suggest more downward pressure and I should step aside for now. But I'm just wondering if this is a buying opportunity or a trap. Discipline over conviction I guess. Sorry for the rambling.
They are at a 52 week low because there hasn't been much drugs approved.
The FDA is being extra careful after the Vioxx scandal and approved less new drugs in 2007 than they've done since 1983.
BMY
They lost their cash cow Plavix after Apotex decided to release generics of it on the market. BMY won the patent dispute but Plavix's sales has never recovered back to the norm levels as before. I know my pharmacy dispenses less Plavix than we did a year ago.
AZN
They don't have a monopoly in the cancer market anymore. They've been beaten to the punch by Roche and many others. Most of their recent Phase III trials have been very disappointing or failed. The FDA has given a generic manufacturer OK on making a generic version of Nexium. Nexium had sales of $5.2 billion in 2007. That's ~20% of AZN's profit.
PFE
Good dividend yield. Unfortunately their phase III pipeline is a complete piece of crap.
Zyrtec had $1.5 billion in sales in 2006 and is now available OTC by J&J and others.
Lipitor will become a generic by 2010.
Viagra will become a generic by 2011. By then you'll even see a Viagra chewing gum made by Wrigley's.
How does Pfizer plan to come up with the $12.7 billion it will lose in Lipitor sales by 2011? Money can't be created from thin air. Money doesn't grow on trees either.
Pfizer?s experimental drugs will not be able to replace it's lost revenue from Zyrtec, Lipitor and Viagra.
SNY, ABT, and anyone else missing I either don't know much about or haven't done an indepth analysis on them.
The only Pharmas worth my investment are NVO(monopoly in insulin market), Roche(monopoly in cancer market), and SGP(based on valuation only and nothing else).
Personally though, I've left most of the big pharmas. I'd recommend some other places in the healthcare sector where there is moolah($$$) to be made.
1.) Express scripts and Medco Health Solutions (health insurance/pharmacy benefit managers)
-Insurance. Need I say more?
2.) Teva, Mylan, and Barr (generic drug manufacturers)
-$150 billion worth of brand name drugs will be going off patent by 2010/2011. What more needs to be said?
3.) Gilead Sciences (biotech)
-I've had this stock for 3 years. Never been disappointed. They still have their HIV/AIDS and Hepatitis monopoly. Excellent drug pipeline too.
4.) Mindray Medical and Covidien (medical equipment)
-Another two of my holdings.
In case you haven't noticed, I'm a healthcare sector freak.
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