Cramer would put all Big Pharma stocks on the Sell Block.ĬEO Interview: Andrew Damico, IntraLinks Holdings ( IL), ( CRM)Įveryone wants to get on the cloud, and with ( CRM) up 113% since last year and up 530% since Cramer backed the stock in 2008, the cloud keeps soaring higher. The only plus is the dividends these stocks offer, but with so little to sustain the yield, even this advantage is doubtful. The growth and protection is gone from this sector. The FDA has gotten tougher about approvals 2010 saw the lowest number of drug approvals for three years. Companies are increasing prices to try to offset losses, a move which gives generics an even bigger advantage. GlaxoSmithKline is cutting R&D by a third and Lilly, with a 24% reduction in its R&D budget, is not far behind. With these companies having to slash their research and development budgets, there is no way they can recoup the losses to generics of their blockbuster drugs. Even worse, the number will double to $36 billion for 2012. A full $15 billion worth of drugs are going to lose this protection in the coming year, spelling a 39% decline in Bristol Myers' ( BMY) profits, a 12% decline for Merck, a 34% drop in Eli Lilly's ( LLY) profits and a 20% loss for Pfizer ( PFE). The problem is not Merck-specific, but could happen to any of the other pharmas.Ī huge problem for the industry is the loss of patent protection. It is shocking to see a stock decline so much for a drug that is not going to be released in 4-5 years. "This is just one expensive graveyard of stocks." Merck ( MRK) seemed to have a promising cardiovascular drug in its pipeline, but when the FDA did not approve it, the stock declined 6.6% and is now down 11%. Sell Block: Merck ( MRK), Bristol Myers ( BMY), GlaxoSmithKline ( GSK), Pfizer ( PFE), Eli Lilly ( LLY)Ĭramer is retiring a once-defensive group of stocks onto the Sell Block Big Pharma. That is, Cramer thinks this laggard will play a big game of catch-up as the Street assigns Merck a similar premium to its big pharma brethren.Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday February 17. These Stocks Should Be Bought AggressivelyĪs drugs such as Merck's new ragweed allergy medication or its ovarian cancer drug get FDA approval, Cramer thinks Merck will come back into favor with the Street – not only will investors see new profit potential but they'll also be drawn by the 3.75% yield.Īnd as that happens, Cramer anticipates something called a reversion to the mean trade. And of those 16, there are five drugs that could be approved this year." "Within their late-stage pipeline, the company has 16 phase 3 programs, the last phase before a drug can come up for FDA approval. "Merck has 35 drug candidates in phase 2 or phase 3 development-that's the second most of any pharmaceutical company out there," Cramer said. "They also have a big and rapidly growing diabetes business and a vaccine division that's also growing fast." "That includes a decent-sized animal health business that they could spin-off," Cramer said. "Right now, going forward, of all the big pharma companies Merck has the least exposure to drugs losing patent protection and going generic. The company is finally over the patent cliff and on solid ground. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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