Replies to post #119693 on Biotech Values

[acgood]

The only other big cap I've owned in size is Teva - got them when they acquired Ivax back in 2005 and held them until last year.

Were you the one on this board who called the top in TEVA in the 60's last year? That was a great call to within a dollar if I recall.

[DewDiligence]

NVO I like for basically your demographic-tailwind argument - diabetes is such a growing market that a good company in the space is very likely to do well.

I hope to have NVO in my portfolio at some point, but I’m aligned with jq1234 in seeking a better entry point (#msg-62862544) to compensate for the risk of insulin FoB’s (#msg-55717672, #msg-55717310).

So it's mostly a "buy and forget" type of stock.

NVO would be a bona fide buy and forget stock if not for the FoB threat, but that changes the calculus, IMO.

[DewDiligence]

My general concern with owning big pharma is that I just don't follow them closely enough to have real any reason to believe that I can beat the market's view on them. Basically the analysts understand them better than I do.

Actually, I think most sell-side analysts are clueless vis-à-vis Big Pharma’s prospects from The Global Demographic Tailwind. If you asked five randomly selected sell-side analysts whether Big Pharma’s profit margins in emerging markets are higher or lower than the corporate average, I’d bet at least four of them would give the wrong answer.

PFE’s 1Q11 CC was a case in point: 70% of the questions were about spinning off one of PFE’s “non-core” units, which is much ado about nothing, IMO. (Despite Elliott Spitzer’s settlement, sell-side analysts continue to lobby aggressively for changes that generate huge banking fees.) To my knowledge, not one analyst on any PFE CC has asked what Lipitor sales will be after the drug goes generic in all countries. (My guess is $3-4B/yr for many years to come.)

The bottom line, IMO, is that you can indeed outplay the market with respect to some Big Pharma stocks, and you get nice fat dividend while you wait for the market to figure it out.