For Immediate Release
Chicago, IL – January 29, 2010 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Pharma & Biotech Industry, including GlaxoSmithKline (GSK), Eli Lilly & Co. (LLY), The Medicines Company (MDCO) and Genzyme Corporation (GENZ).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/29895/Pharma+%26amp%3B+Biotech+Stock+Review.
We recommend avoiding names that offer little growth or opportunity for a take-out. These include companies which are developing drugs that are likely to face regulatory hurdles. The FDA has been exercising more caution before granting approval to new products and several candidates have been facing delays in receiving final approval.
We currently have an Underperform recommendation on GlaxoSmithKline (GSK). Although the company’s diversified base and presence in different geographical areas should help support revenues, we remain concerned about future growth prospects given the patent challenges being faced by several of Glaxo’s products.
With several products expected to lose exclusivity and the swine flu opportunity likely to miss expectations, we expect the company’s top-line to remain under pressure in the coming quarters. Glaxo’s pipeline needs to deliver in order to make up for lost revenues and any development or regulatory setbacks would be a major disappointment for the company.
We would also avoid companies like Eli Lilly & Co. (LLY), which are facing patent expirations on key products and do not have a solid pipeline to make up for the loss of revenues that will take place once generics enter the market. Another name that comes to mind is The Medicines Company (MDCO) — our biggest concern with the stock is that lead product, Angiomax, will most likely lose patent exclusivity in the U.S. in September 2010.
Meanwhile, we continue to believe Pfizer’s acquisition of Wyeth will create an even bigger struggling company. Both companies have significant patent expirations in the years to come, and both have been severely lacking in their R&D productivity over the past few years. We recommend avoiding these names.
In the biotech sector, we would avoid Genzyme Corporation (GENZ) which has been under a lot of pressure over the past few quarters following the temporary shutdown of its Allston manufacturing facility due to contamination problems. Although the company is now working on emerging from the impact of its manufacturing issues, it may have to face additional challenges before it is able to go back to a normal production and supply schedule. The recurrence of manufacturing issues would be a major setback for the stock.
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