Stock-pickers all have their own private biases, their own evaluation methods. So we guess it's no wonder that on one day, two vastly different pharma firms would get the nod as superior investments. Still, it says something about today's crazy market that Gilead Sciences--a specialty, high-tech pharma company--would be recognized along with stripped-down, scrappy generics maker Teva Pharmaceutical Industries.
First, Gilead: The Financial Times reports that the U.S.-based drugmaker delivered standout value for shareholders, 36 percent better than the average among its peer group. The company outperformed the market every single year from 1999 to 2008, according to a study by BCG, a consulting firm. Among the reasons: Surging demand for its products. That's always nice work if you can get it.
Then there's Teva. Esquire recommends the Israeli drugmaker's stock, despite the fact that its P/E ratio is 47-to-1. The magazine hails Teva for its market-leading position in generics, twice the size of No. 2 Mylan at a time when cost pressures are pushing more buyers toward copycat meds. And for its branded MS treatment Copaxone and Parkinson's disease med Azilect, which the magazine predicts will reach $2 billion in annual sales eventually.
But Esquire also recognizes that it's not just the nuts and bolts of the pharma industry favoring Teva, but CEO Shlomo Yanai's ability to grow revenues and margins concurrently. Indeed, the BCG study mentioned something similar about every company on its high-performing list. "When you get to top ranks, the secular trends don't matter as much," Eric Olsen, one of the study's authors, told the FT. "It's what you do with your company's strategy, your capital deployment and your management agenda."
- see the Esquire story
- read the article from the FT