Pharma news

planteria

Scarpacci wrote: »

GSK is a core holding for me. I have bought in over the last two years and primarily chose GSK over AZN because GSK was in better position with the "patent cliff". GSK has already seen some of its top drugs fall off the patent cliff, while its pipeline was strong.

it is for me too. along with Vodafone, Amazon and GPE, one of my largest. i chose GSK ahead of AZ for similar reasons...but also like/liked their consumer products business.

however, this weekend, after much discussion, had decided to make the pair of them the biggest holdings in my portfolio. so today's news has been a surprise. as it happens Neil Woodford has been invested heavily in both of them too...not sure if they are still the biggest holdings in IPI and IPHI.

planteria

yes, IPI:

1 AstraZeneca 9.72% United Kingdom Pharmaceuticals & Biotechnology
2 GlaxoSmithKline 9.51% United Kingdom Pharmaceuticals & Biotechnology
3 BAE Systems 5.67% United Kingdom Aerospace & Defence
4 Roche Holding AG Part. Cert. 5.36% Switzerland Pharmaceuticals & Biotechnology
5 British American Tobacco 5.10% United Kingdom Tobacco
6 Imperial Tobacco Group 5.03% United Kingdom Tobacco
7 BT Group 4.97% United Kingdom Fixed Line Telecommunications
8 Capita 4.91% United Kingdom Support Services
9 Reckitt Benckiser Group 4.34% United Kingdom Household Goods & Home Construction
10 Rolls-Royce Holdings 3.90% United Kingdom Aerospace & Defence

Wilkins

I have roughly 2% in both, so good news in a way, but they are mainly dividend stocks as far as I am concerned.

Doshwaster

planteria wrote: »

you mean bad for employees? therefore potentially bad for the UK economy? such closures could be good for the profitability/dividend/shareprice..

Fair point.

As someone who works in the sector, I want to see a strong UK pharma and biotech industry not only for my own selfish career prospects but it is a business in which we are still world leaders and supports many high skill and high paid jobs directly and in their supply chain.

AZ and GSK are the only two Big Pharma companies left with major UK R&D sites after Pfizer massively downgraded Sandwich a few years ago.

In terms of investor value, like others GSK is one of my core holdings and a "keep forever" stock. I'm more interested in long term stability with a healthy dividend than any short term money making opportunity.

planteria

Doshwaster wrote: »

Fair point.

As someone who works in the sector, I want to see a strong UK pharma and biotech industry not only for my own selfish career prospects but it is a business in which we are still world leaders and supports many high skill and high paid jobs directly and in their supply chain.

AZ and GSK are the only two Big Pharma companies left with major UK R&D sites after Pfizer massively downgraded Sandwich a few years ago.

In terms of investor value, like others GSK is one of my core holdings and a "keep forever" stock. I'm more interested in long term stability with a healthy dividend than any short term money making opportunity.

great post, and i am entirely with you. i'm not advocating short-term gain over long-term income...and yes, really pleased the UK is strong in this sector.
at the same time, i suppose if there were to be quick profit from consolidation, id take a slice of it on the basis that if i don't it will happen without me..
good businesses prosper or become takeover targets, so you can, as an investor, back good businesses and then sit and observe how the benefits materialise:)

planteria

from HL:

"Focus on pharmaceuticals
By Richard Hunter | Fri 25 April 2014

The patient may be showing signs of revival.

This week, three major Pharmaceutical announcements have brought the sector in from the wilderness and straight into the limelight.

The first was a $20 billion asset swap between GlaxoSmithKline and Novartis and the formation of a new joint venture.

Meanwhile, it also emerged that US giant Pfizer had previously failed with a reported $100 billion takeover of AstraZeneca. This stoked speculation of a second attempt and caused GlaxoSmithKline, AstraZeneca and Shire share prices to jump 5.2%, 4.7% and 7.6% respectively on the day.

Excitement was heightened further in the US when Canadian based Valeant Pharmaceuticals International launched a $47 billion hostile bid for Allergan in the US.

Focusing on strengths
After years of mega-mergers in the sector, particularly around the turn of the century, and in an effort to mitigate the pain of the ‘patent cliff’ by wringing out cost savings, pharmaceutical companies appear to be going back to basics.

There has been a noticeable trend occurring in the Pharmaceutical sector. Companies have been divesting weaker parts of their business and focusing on their areas of expertise in an effort to discover the next blockbuster drugs, which have been few and far between in recent years.

Perhaps the writing was on the wall when you consider the recent history of the Research and Development. Along with the mega-mergers, came the requirement for mega R&D departments, but these soon became unwieldy, bureaucratic and costly. The financial crisis sharpened the focus such that the new trend became either to outsource the R&D to smaller specialist biotech companies or, indeed, to take the company out entirely.

The subsequent focus on cash generation through more streamlined business has led to increased return of capital to shareholders, in the form of share buyback programmes and generally higher dividend yields, though as with all dividends these are variable and not guaranteed.

Our view
Over the last few years, we have been suggesting that the Pharmaceutical sector should be one to watch. Indeed, we still believe the longer term picture remains positive. The global population is aging and will require the use of more specialist drugs.

There is also the emergence of a new middle class in the world's fastest growing economies requiring more readily available medicines and the expansion in universal vaccination programmes in some developing economies. Drug companies, as a result, need to rely less on "white pills in Western markets".

The sector is in the midst of reinventing itself to become more of a business and less of a laboratory, with selective specialist acquisitions reducing the reliance on massive Research and Development budgets.

And yet...
For the moment, with the exception of Shire, it appears that analysts are not entirely convinced.

Even so, a return to basics and specialisation could prove to be a winning strategic turnaround from the big pharmaceutical companies. If new blockbuster drugs are discovered following this clustering of expertise, the share prices of these companies could benefit accordingly.

Market capitalisation Share price 3 months (%) Share price 6 months (%) Share price 1 year (%) Dividend yield (%) Market consensus
GlaxoSmithKline £79.8 billion +1.75 +3.51 -1.49 4.75 Hold
AstraZeneca £51 billion +7.45 +29.64 +23.33 4.13 Hold
Shire £18.7 billion +10.19 +17.14 +60.69 0.37 Strong buy"

http://www.hl.co.uk/shares/share-tips/richard-hunter-weekly-comment/focus-on-pharmaceuticals?utm_source=Silverpop&utm_medium=email&utm_campaign=E00IC_Investors%20Chronicle%20email_114%20(1)&utm_content=Focus%20on%20pharma&theSource=E00IC&Override=1&sp_mid=45715914&sp_rid=bXJkYXZpZGpjbGFya2VAaG90bWFpbC5jb20S1

planteria

Pfizer confirm their continued interest in AstraZeneca this morning...

"US drugs giant Pfizer has confirmed it has contacted AstraZeneca over a possible multi-billion pound takeover.

Pfizer said it made an initial approach in January, but after "limited high-level discussions" AstraZeneca discontinued the talks on 14 January.

However, it said recent market developments had prompted it to approach AstraZeneca for a second time....."

http://www.bbc.co.uk/news/business-27185027

i'd be holding if my ISA transfer had gone through

Doshwaster

AZ up 15% already today. I really should have filled my boots last week.

yatinsardana

Wow at the AZ share price

Scarpacci

Interesting talk right now that this will be an inversion which sees Pfizer, as a corporate entity, based in the UK. AZN put out a release saying they had raised concerns about Pfizer's plan to invert for UK tax domicile, although Pfizer were seeming to suggest this would just be a holding company for AZN.

There's a lot of talk in the US about their tax system keeping US companies from repatriating their overseas earnings. It would be big news for the US to lose one of their top companies to the UK.