A busy month for drug announcements at Teva Pharmaceutical Industries (TEVA) with news on Copaxone, Azilect, and Gianvi–and it’s only June 4.
Of these Gianvi is the biggie—at least for now.
The drug is a generic version of Bayer’s (BAYRY) oral contraceptive Yaz. Sales of Yaz came to $780 million in 2009. The contraceptive has been especially popular among younger women since taking it produces less water retention than some other contraceptives and works to reduce acne. But sales of Yaz have dropped recently to an annual rate of about $600 million as Bayer has cut back on advertising and promotion. (Bayer’s newest contraceptive Natazia was approved for sale in May.)
The Gianvi launch counts as a positive surprise for Teva.
Teva’s launch of Gianvi comes about 13 months ahead of schedule (Wall Street was expecting a 2011 launch) and because Teva is first to file for generic rights the company will get 180 days of marketing exclusivity.
Gianvi will add about 10 cents a share to annual earnings at Teva and with some of that already in the price, I’d estimate, I don’t see any reason to raise my target price of $66 a share by October 2010.
But this kind of quick to market approach is, the launch of Gianvi should remind us, is why Teva is the generic stock in Jubak’s Picks. (For more on generics and the increasing importance of emerging economies to drug makers, see my post https://jubakpicks.com/2010/05/24/in-the-drug-sector-do-where-the-growth-is-generics-and-emerging-economies/ )  Â
Full disclosure: I own shares of Teva Pharmaceutical Industries in my personal portfolio.
Since the posts were off topic anyway, i will jump in re Oil sands in Canada. Southof8 the correct number is closer to $45/bbl not $120. If you think about it a little you will realize that is true since they have been developing this play for years and oil has not been above $120 very often. To EdMcGon, the sage of the Jubak boards, your argument is backwards. Being related to the price of oil is not the problem of the oil sands, it is the opportunity. Here you can hedge oil price increases without drilling or significant political risk. CVE, CNQ, Suncor are ways to play this. Note the Chinese just bought Conoco’s interests for a hefty sum. I’m not saying the Chinese are always right but it does seem that there is a buyer. They may even know more than EdMcGon, lol. Ohhh Canada!
Why would you purchase a stock based in Israel right now? Is Iran gearing up to attack Israel? I think so or do we not take them at their word? A grey swan turns black if someone doesn’t do something about enriching uranium in Iran. I’m very cautious!
I’ve read oil needs to be north of $120 for production from the sands to be tenable. As an investment, it strikes me as a long odds proposition.
jamba,
The problem with oil sands is they are fully dependent on the price of oil. If the price of oil goes up, oil sands can be profitable.
Unfortunately, the price of oil is meeting a strengthening dollar headwind. Until that ends, oil sands remain a margin player in the energy industry.
For now, natural gas looks like the best play, but demand has to be increased for it first. I’m staying away from the energy plays until we see how the whole BP spill plays out (and don’t think it’s over when the well gets capped).
jumba & Ed, I’m also interested in finding some top pics that could benefit from the spill. It seems the spill will go on for at least 2-3 more months, perhaps longer. I think the big problem is a lot of these companies, Gas, Nuclear, Solar are in the hands of the politicians.
Ed,
On another subject what is your opinion on oil sand companies like CVE benefitting from possible restrictions from off shore drilling? And on ECA who might benefit from shift toward natural gas, also has lagged for awhile. I know the market is in a downward trend but I am talking buying somewhere down the road for long term.
Thanks
java12jack,
Right now, even dividend plays are risky. To use EMR as an example, let’s say you buy it at $45, and next week the market takes it down to $40. Ok, you buy some more to lower your cost basis. The following week the market drops it to $35. And the week after that it drops to $30. Do you still keep buying more? Note your dividend yield is still only about 3%, but your principal has been eroded by the stock’s drop.
Mind you, I’m only speaking hypothetically. I’m not saying EMR is going down to $30. However, this is a “take no prisoners” bear market, that is dropping bad and good companies alike, mainly because we (as investors) can’t tell what the economy holds for us in the future, even for the rest of the year. So you have to take any company’s past results with a grain of salt.
I will add that at least a dividend gives you incentive to hold onto a company’s stock through this downturn. But I would want a better return than 3%.
Jim – a great company and a good stock. I’d look to support around $44-$48/share (which would coincide with S&P around 950).
Hope everyone is narrowing their watch list to those securities that you really believe in and desire to own, AND raising cash for eventual purchase (unless, of course, the world really is ending — aren’t we about 100K years overdue for a shift in the magnetic poles?).
I owned TEVA last year, sold at even. Did not work well for me, though I still think it’s a interesting thought if anyone wants the generic drug play. It’s better than India’s generic firms, however permanent stop-loss order may be needed for any Israeli stock. Just in case….some scary object falls from sky….
Jim or Ed,
Of subject but what are your thoughts on some of the industrials that are pulling back right now and have a dividend, like and EMR?
Jim, I have been reading your commentaries for a number of years and just want to tell you how much I appreciate your insights into the market and the global economy. You help me make sense of the insanity ( volatility) around us. Thank you so much for your commentaries, research and recommendations.
You certainly help me weather the financial fluctuations.
Jim, Thanks for the update on TEVA. It is a fine choice. I don’t yet own it, but did pick up some more Abt. on today’s drop.