As the market has been pretty focused on what?s going on with the financial sector over the past week, we don?t want to lose sight of healthcare and what?s going on there. We are joined by Zacks senior drug industry analyst
Jason Napodano, CFA for his outlook on the industry.
Given the challenges in the market right now, are you seeing areas to invest in pharma / biotech?
Well, that?s a good question Mark, and the answer is absolutely we are. The ole ?baby and bathwater? move seems to be the prevailing scenario in the market right now. But, I think things should settle down soon, so let?s talk about two different strategies that we have right now for investors looking to put money to work in healthcare.
The first is the long-term, big, safe, blue-chip strategy. Here I really would recommend Abbott Labs (ABT). It?s our top-pick in large-cap pharmaceuticals. The stock has held up very well over the past three months in this turbulent market. In fact, it?s actually up around 10% since mid-June.
The reasons we like Abbott are numerous, but the key points are simple. The core business is solid. Products such as Humira, TriCor, Kaletra and Niaspan are all growing double-digits. Humira is really picking up significant market share against Amgen?s (AMGN) Enbrel and J&J?s (JNJ) Remicade in the anti-inflammatory space. It?s on track to become one of the top-five largest pharmaceutical products in the world over the next few years.
But besides the pharmaceutical business, Abbott?s vascular, diagnostics and nutritional business are all also growing at double-digit rates. The company recent entered the drug-eluting stent (DES) market with its Xience V product. Based on clinical data, Xience V looks like the best product out there and should again significant share over the next few quarters against J&J?s Cypher and Boston Scientific?s (BSX) Taxus. We think it could be No. 1 in market share by 2009. That?s truly amazing considering Cypher and Taxus have been on the market for years now.
We also like the pipeline at Abbott. The company has teamed up with AstraZeneca (AZN) recently to co-promote cholesterol blockbuster Crestor. Eventually the duo will co-formulate Abbott?s TriLipix, a ?next-generation? TriCor product, with Crestor to form one pill designed to lower LDL cholesterol and control triglycerides.
