Sicor (SCRI). Mapping the human genome may be a scientific breakthrough, but for investors it's proved almost as painful as the Internet bubble. Yet there are still opportunities in biotech for investors. Dozens of the first generation of bioengineered medicines will be losing their patent protection over the next few years, and generic versions are estimated to represent a $10 billion global market.
Sicor is one of only two companies poised to take advantage of the soon-to-be-exploding market for generic versions of blockbuster biotechnology drugs. The company recently built a Mexican plant to make generic versions of biotech drugs such as cancer-fighting Neupogen and Interon, a treatment for hepatitis C.
Established biotech firms are expected to fight fiercely to protect their patents, but Sicor made news last year when it won a lawsuit filed by Bristol- Myers Squibb trying to block its production of cisplatin, a generic version of Bristol's Platinol, a cancer drug.
With a continuing emphasis on controlling health care costs, an aging population that will need more generic medicines and the fact that it faces little direct competition, Sicor seems ideally positioned. While a generic manufacturer can't expect the profit margins earned by manufacturers of patented medications, it should be able to capitalize on volume. Analysts expect annual earnings growth of 28 percent over five years.
Source: SmartMoney 10 stock for the next ten yrs.
Also:
So what would you recommend among your recent small cap picks?
One recent addition to our small cap list is a generic drug company called Sicor. We had a great deal of success with it last year; it went from around $10 to almost $27, and we ended up with a double on it, getting out before it dropped back down to around $15. We put it back on the list in January since it started going sideways. Last week the company came out with an interesting earning report, declaring fourth-quarter profits of $47.5 million, or 41 cents a share, compared with profits of $9.8 million, or 9 cents a share, a year earlier. It has a lot of generics, but they're interesting, niche generics; they're biologicals, so the company won't have a lot of competition. It generally commands better profit margins than your typical generic maker.
forbes.com
Jim |
