Report: Flat drug stocks are buys
By Tom Bemis, CBS MarketWatch
Last Update: 2:43 PM ET May 15, 1999
NewsWatch
NEW YORK (CBS.MW) -- Drug stocks, which helped power much of
the bull market's run until this year, may represent a buying opportunity
according to at least one analyst.
Salomon Smith Barney's Jason Kolbert told
Barron's Magazine the outlook for the sector
remains "very, very robust."
That's because as baby boomers age they are likely
to keep up demand for drugs to make them feel
better.
Unit sales of pharmaceuticals have grown 10
percent a year for three years, Barron's reported.
In addition, new drugs have seen strong growth
even though they're competing against established
products, suggesting that the overall market is
bigger, Kolbert told the magazine.
He cited Lipitor, a cholesterol drug sold by Warner
Lambert (WLA: news, msgs) and Pfizer (PFE:
news, msgs). It competes against similar products
from Merck (MRK: news, msgs) and
Bristol-Myers Squibb (BMY: news, msgs).
Drug companies have increased advertising directly
to consumers in a bid to boost sales. The strategy
has helped pay off for Pfizer's anti-impotence drug
Viagra, Merck's anti-baldness pill Propecia, and
Schering-Plough's (SGP: news, msgs) anti-allergy
pill Claritin.
Biotech companies like Centocor (CNTO: news, msgs), Immunex
(IMNX: news, msgs) and IDEC Pharmaceuticals (IDPH: news, msgs) are
also coming up with new products which can help boost performance at
larger drug companies that back their research or help with marketing.
Kolbert told Barron's he also likes Eli Lilly (LLY: news, msgs) which has
extended the patents on its blockbuster anti-depressant drug Prozac.
(Barron's) |
