Teva Pharmaceutical Is On Sale
In the world of big Pharma the next few years are now known as the drug patent cliff. The biggest drug companies in the world will have many of their best selling drugs coming off patent protection.
In fact, 22 of the largest 50 small molecule drugs in the industry are open to generic competition in the next few years.
So, the industry is scrambling to find future growth opportunities through mergers, new drugs and cost cutting. It is certainly a difficult time to be a large drug company unless the cycle is working in your favor.
Teva Pharmaceutical is the largest generic drug company in the world and the drug patent cliff means other drug companies pain means will lead to Teva’s eventual gain. A report from Wells Fargo last week said it best: “We continue to believe TEVA is “best-in-class” in generics, with vertical integration, a global footprint, broad pipeline, and generic biologics capabilities.
In fact, Teva has already filed applications for generic versions of 16 of the top patent expiring drugs. These drugs represent brands with over 40 billion dollars of sales. Teva shares are off 25% from their March 2010 highs due to short term concerns about proprietary drug, Copaxone and are currently on sale.
The price to earnings ratio of the stock for next year is just 10. In addition, Teva has just authorized a one billion dollar share buy-back and has just received excellent news on the prospects of another of its proprietary drugs, oral laquinimod, a novel therapy that can potentially improve the lives of many MS patients in a safe way.
Teva is the only real growth story in the drug industry today. Current prices around 50 will not last long. The stock is undervalued and is at least a double by the year 2014. eWorldvu will buy 400 shares at a price not to exceed $52.50 on Monday December 20, 2010 for the Growth Portfolio .
Meanwhile, the news is not as good for current Model Growth Portfolio holding, Pfizer. The company is about to deal with its own drug patent cliff in the next few years. Also, the consistent failure of new drugs in the Pfizer pipeline has led to the recent termination of its CEO, Jeff Kindler. eWorldvu will sell the Growth Portfolios holdings of Pfizer on Monday December 20, 2010 at a price above $16.99 per share.
Berkshire Hathaway (Invest with The Oracle Of Omaha-Buy Berkshire Hathaway) is also a eWorldvu Model Growth Portfolio stock sale on Monday December 20, 2010. While we continue to like Warren Buffetts firm, the portfolio holding is up over 11% year to date and the stock has become fully valued. We would consider initiating a position again in the stock on a pullback under 70 in the future.
(Please do your own due diligence prior to investing. Risk tolerance is different for every investor. Members of eWorldvu may have long positions in TEVA.)
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