Dino, you have a right to be concerned, Re: "The only risk I see is that the market does not reach the lofty expectations the public has projected in the stock valuation."
PFE is trading 43 X 98 earnings and 33X99 earnings. The only reason for this is Asia, because people are afraid to buy other stocks.
My Merrill -Lynch broker this AM told me that he was ashamed that Merrill had a buy opinion on PFE with a PE of 43. He mentioned that this AM Merrill's chief analyst Charles Cough berated " drug companies paying 50X earnings to buy companies growing at 19X earnings ", alluding to the recent Smith Kline talks, and " that
Overexpansion is the surest way to dilute your earnings ".
As I see it the threat to the pharmaceutical industry is " Medisave ",
the Republican plan to allow people to put away tax free a Medical savings account and buy drugs or insurance out of it. This I think will pass in the future because the trend in America now is to stop sending money to Washington which manages it wastefully and LEAVE it in the taxpayers pocket where it properly belongs and let him best make the myriad economic daily decisions using myriads of market input data, something big Government has consistently failed to do over decades: all they succeeded was to go further in debt. Anyway, I believe that Medisave will have an even greater likelihood of passing if Bill Clinton resigns as I think he will and the Democrats take a beating in the next polls.
At that point the consumer will not pay $100 for a prescription that he can substitute with a $50 pill.
There is no reason to pay top dollar for Zithropak ( PFE) because it is a once a day Erythromycin when a three times erythro at 1/3 the price will do. The same for calcium channel blockers. If the patient has to pay for it they'll get the cheapest and there are now at least two competitors to Procardia(PFE). The same for PFE's new antibiotic Trovan: There is Levocquin on the market which is just as good and more on the way; competition;prices come down. But also why pay $100 for Trovan when you can treat a simple Urinary Tract infection with a cheaper Bactrim? Same for respiratory infections.
In fact respiratory infections will be the biggest hit on oral antibiotics. EVERY WELL-TRAINED physician knows that 99% of colds are due to viruses and ALL, repeat, A L L , antibiotics do ZERO, repeat, ZERO, to colds. When the patient will be faced with a $100 bill + doctor fees and out of pocket pay, he/she will do what people did for 100 years: take an over the counter pill, an aspirin, go to bed, and stop smoking ( hopefully, GG ).
My two cents Dino, after many years in private practice as an M.D. and as an investor. The Erectile field will not make up for other losses IMHO especially since Virgo is an erection " ENHANCER ".
i.e. Viagra cannot CAUSE an erection. So that if a person is totally impotent and can't get it up Viagra will do nothing for it. Vivus/ MUSE instead will because MUSE is a DIRECT penile artery muscle vasodilator. Further more Vivus is working on other arterial dilators. I am excited by the use of their new band AXIS that is placed at the bottom of the penis prior to pellet intraurethral
insertion because that allows the medicine to stay longer there and be more active and less absorbed systemically. Then when the erection is complete in ten minutes the band is taken off and pronto you got 30 to 60 min to work with. You don't have to have a stop watch and wait 30 - 60 min like Viagra.
Furthermore Vivus is undervalued now.
First Call ( Daily Graphs/Investors Business Daily ) has $2.04 for 99 giving PE of 7. Zacks has $3.45 for 98 giving it PE of 4 !!!!
All in my opinion.
TA |
