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Sanofi: The First Victim in the Great Insulin Price War

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The steady growth expected from Diabetes products has come to an abrupt halt. Is Sanofi adequately prepared to replace the revenue loss of its top-selling product? By Alexander J. Poulos and Kris Rosemann The diabetes pandemic continues to expand at a rapid pace. Diabetes is a condition where the body is unable to regulate the amount of sugar found in the blood correctly, and it is differentiated into two distinct types. Type one diabetes is defined as a condition where the body does not produce any insulin, thus requiring regular supplementation to maintain proper regulation. The second and more common version is Type 2 diabetes where the body loses the ability to produce an adequate amount of insulin to regulate … Read more

3 Critical Drug Approvals For Your Radar

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What can investors expect when it comes to imminent drug approvals? Let’s cover three important ones. By Alexander J. Poulos The drug discovery process is a tedious multi-step process that is fraught with peril. The design of the clinical trials remains very costly with little in the way of assured success. Companies that can successfully shepherd through a compound are often rewarded a lucrative patent that allows for monopoly-like margins for a limited time. We monitor the drug-discovery process closely, with a particular emphasis on PDUFA (Prescription Drug User Fee Act) dates. A PDUFA date is when the FDA needs to rule whether or not a new drug application will be approved and become available to the market. A delay … Read more

Is AbbVie a Value Trap?

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With uncertainty surrounding the patent of blockbuster drug Humira, AbbVie is looking to deliver another success story from its pipeline. Is it headed for a patent cliff? Let’s take a look. By Alexander J. Poulos and Kris Rosemann A successful operator in the pharmaceutical industry (XLV) is often characterized by having high margins, allowing for copious amounts of free cash flow generation, which can be returned to shareholders via dividends. In today’s yield-starved market environment, major pharma, and the above-average yields of some players within, remains in demand, but investors must be cognizant of the unique risks that face the industry. One key risk remains the loss of patent protection on drugs and treatments that leads to the aforementioned attractive … Read more

The Dreaded Patent Cliff: 3 Pharmaceutical Companies at Risk

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Image Source: Global Panaroma Let’s have a look at 3 pharmaceutical giants that may encounter some troubles in coming years. By Alexander J. Poulos and Brian Nelson, CFA Established companies in the pharmaceuticals industry (XLV) generally offer an appealing blend of high profit margins, a relatively recession-resistant nature of commercialized products, and a flourishing drug pipeline. In many ways, companies in the industry can be viewed as largely defensive, with a resilient revenue profile and profit stream helping to power a steadily-growing dividend, which remains highly prized in the current income-starved environment. In addition to a focus on balance sheet health and the timing of future free cash flow generation, when it comes to pharmaceutical entities, we also analyze the … Read more

Part III: Nelson’s Evaluation of Berkshire’s 2015 Annual Report

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<< Go back to Part I << Go back to Part II By Brian Nelson, CFA It’s always a wonder to open up on the Berkshire Hathaway (BRK.A, BRK.B) annual report for a large variety of different reasons, but every time I do I can’t help but ponder yesteryear through the table on page 2, “Berkshire’s Performance vs. the S&P 500.” I think I have a unique knack for imagining what might have been if today’s standards would have been applied to Berkshire in the 1970s, perhaps in some ways how many baseball fans may think about whether the legends of the past would have put up the type of numbers that they did if presented with today’s dynamics. For … Read more

April Deals May Flower Future Growth

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Image Source: Iqbal Osman By Kris Rosemann Thursday, April 28, was marked by a surge of M&A activity, as major corporations continue to search for growth as global economic concerns remain and the US economy shows signs of slowing. The world’s largest economy, which is accustomed to slow starts to the year, saw seasonally-adjusted GDP grow at a 0.5% rate in the first quarter of 2016, the slowest rate for the first quarter since 2014. Though a rebound in GDP growth in the second quarter has followed in nearly every year since the Great Recession, a variety of global pressures has caused US GDP growth to slow on a quarter-over-quarter basis since the second quarter of 2015 when it nearly … Read more

ASCO Reveals That Big Pharma Is Alive

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This weekend, the annual American Society of Clinical Oncology (ASCO) kicked off in Chicago. The theme this year? Immunotherapy. The conference is traditionally littered with news from biotech companies revealing results from clinical studies, but this year’s event also included some news from big phama companies that haven’t been bursting with pipeline breakthroughs in years. Let’s take a look at some of the news out of the event. Firms Highlighted: Bristol-Myers Squibb, Merck, GlaxoSmithKline, Amgen, Galena Biopharma, BioMarin, Celgene. Bristol-Myers Squibb Source: BMY ASOC 2013 Presentation Bristol-Myers Squibb (click ticker for report: ) isn’t exactly what we’d call an under-appreciated company. Over the past year, shares are up 43%. However, this year’s ASCO only further ignited the fire. The company … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

Earnings Update on European Big Pharma Featuring Novartis, Sanofi, and AstraZeneca

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The drug industry is a global market with an impressive array of competitors headquartered outside the US. The quest to bring forth novel treatments continues. We continue to focus on the large-cap traditional pharmaceutical companies for their defensive characteristics, and many also pay a generous dividend. By Alexander J. Poulos Novartis Poised to Cycle Through Loss of Patent Exclusivity on Gleevec Shares of European heavyweight Novartis (NVS) jumped sharply after posting first-quarter earnings April 25. Growth in the pharmaceutical segment remains hampered as the company lapses the loss of patent exclusivity of one of its top-selling products Gleevec. We are looking past the patent cliff and remain focused on the growth products currently in Novartis’ lineup. Cosentyx, a treatment for … Read more