EKS,
It's a difficult question IMO. I have never closely considered SNY, since its ROE was always pretty low. Now, this is tough to compare to GSK/AZN ROE, since you cannot use UK numbers for GSK/AZN that are using different accounting rules than US (and France?). But if you look historically at Yahoo numbers, GSK has had much higher income on pretty similar equity than SNY.
Also if you look at Yahoo P/Es and dividend payouts, GSK/AZN both have lower PEs and higher dividend payouts than SNY.
On the other hand, Buffett owns SNY and not AZN or GSK. So you have a strong support from his side in your choice. Also, SNY earnings growth was just incredible 2004-2006 at least per Yahoo again. Looking at 9 month 2007 SNY results (not on Yahoo, but per company itself), it seems that they don't have any growth for this year.
So I don't really know. But IMHO, the pharma future is very very cloudy. You have mentioned before that you would be happy with 6% organic growth in pharmas for the coming years. I am not sure that even 6% is achievable. I think we are looking for continuous drop of sales and income as drugs come off the patents and are not replaced.
But then, yes, I should have sold AZN and GSK earlier.
I think that JNJ is different, since a large portion of that company is not pharma related. From that point of view, vaccines and healthcare products also help (GSK and SNY). They just don't help enough IMO. |
