Big Pharma Earnings Preview: US Drug Makers May Report Lower 3Q Profits

Stocks Mentioned in this article: 
Johnson and Johnson (JNJ)
Eli Lilly and Co.  (LLY)
Merck  (MRK)
Pfizer  (PFE)


EARNINGS PREVIEW: US Drug Makers May Report Lower 3Q Profit

By Nathan Becker, Of DOW JONES NEWSWIRES

TAKING THE PULSE: Analysts expect most major U.S. drug makers to post third- quarter earnings slightly lower than those a year earlier, as sales of several big-name drugs have declined recently after some consumers cut back on health- care costs. Health-care reform and European national health programs imposing price cuts on drugs also offer added pressure for companies. Results in recent quarters have been skewed by big acquisitions, either boosting companies' revenue or sagging their bottom lines because of charges. Several of the industry bigwigs have also been subject to downbeat credit-ratings news because of recent problems with supply and pipeline issues, as well as upcoming patent expiry.

COMPANIES TO WATCH:

Big Gains For Pain Therapy Stocks Today: KG, PTIE, WPI, ENDP

So Pfizer is increasing their portfolio with King Pharmaceuticals, a maker of veterinary meds and pain therapies.  In addition to this news, another company came into the spotlight for pain management therapies.  This company is Pain Therapeutics (PTIE).  Pain Therapeutics is in clinical trials now in collaboration with King Pharmaceuticals so look for Pfizer to kick in some clinical trial expertise with Pain Therapeutics (PTIE).  Additional companies involved in pain therapies is Endo Pharmaceuticals.  I highly suggest buying Endo as a buy right now.  Since June 2010 Endo's stock has risen form 20.22 to its current trading at 34.99.  I suggest a limit order to buy at some discount.  Another Pain therapies stock is Watson Pharmaceuticals, a generic drug maker. 

My opinion on this is that Pain Therapeutics could be slightly overvalued on the hyped news, and although it may seem attractive to buy right now, I suggest waiting for the pullback as it will be years before these clinical trials are actually approved by the FDA.  Also, I am a little cautious placing a buy on Pfizer right now as they will be losing patents on Lipitor next year and other brand name drugs will become available as generics.  I might actually place Pfizer's stock right now on hold or sell, as earnings could be lower than expected.  Just because everyone is doing it does not make it a buy in my opinion. I actually do not necessarily see King Pharmaceuticals as such a hot buy with only 4.85% profit margin and 18M in profits on 380M in revenue.  But given that layoff will presume who knows. 

Stick to your guns and remain a cautious investor and good things will come.  I apply Warren Buffett's principles to the BioPharma Stock World and like purchasing stocks at a discount.  You should be searching for the next Pfizer and not chasing after something that is overly hyped.  Just my opinion.

Stocks mentioned in this article

Pfizer--(PFE)
King Pharmaceuticals --(KG)
Endo Pharmaceuticals --(ENDP)
Pain Therapeutics --(PTIE)  Up 18.56% today on the news
Watson Pharmaceuticals--(WPI)

Comprehensive List of Drugs Approved During the Summer 2010

I found this nice list of 2010 drug approvals on The Health Wisdom Blog.  This probably is the most informative posting on Drug Approvals from 2010.


Glaxo (GSK), Merck (MRK), Novartis (NVS), Sanofi-Aventis (SNY), and Amgen (AMGN)  were again at the top on these approvals.

New Drugs Approved Summer 2010

New drugs not only offer hope, but possibly a better quality of life, for those awaiting new treatments. However, new drug approvals can also spark controversy. The FDA approved 17 new drugs this summer (June-August 2010). Many offer new promise, and one in particular promises a great deal of future debate.