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Biotech / Medical : Barr Laboratory BRL -- Ignore unavailable to you. Want to Upgrade?

To: harkenman who wrote (104)	4/7/1998 10:56:00 AM
From: rkrw	Respond to of 207

Hark, Actually the 75% is a bit distorted since Barr is merely the sole generic "distributor" of tamxifen. ZEN actually supplies Barr with the finished product and Barr ships it out---I believe. So in effect ZEN controls the entire tamoxifen market, with Barr earning a modest margin on their sales. They are not afforded the typical margins of a sole generic. SO they earn 10-15% margins whereas a first to market generic could garner north of 70%. I do believe as part of Barr's settlement they will introduce their own generic just prior to taxomifens patent expiration in a few years. If you look forward a few years, I believe Barr will have to huge first to market generics to introduce: tamoxifen and Cipro.

To: harkenman who wrote (104)	4/9/1998 7:31:00 AM
From: Philip Aaron Etttedgui	Read Replies (1) \| Respond to of 207

The 75% figure I quoted was from IMS (June 1997). I do not think this stock is undervalued from a fundamental perspective. Price/book of 7 and PE of 31 (FY98) are high (using $44.69/share). If Barr continues to grow at the rate it has been growing for the last 5 years (27%) its PE/growth (PEG) would be 1.15 --making it fairly valued at this time relative to its peers (e.g. Mylan, Watson, Alpharma, and Copley) which have PEGs of 1.0-1.3. IMO any near term appreciation in stock price is due to lofty(although not necessarily unrealistic) expectations of explosive earnings growth as a result of the tamoxifen study. This expectation was passionately voiced by the analyst at Gruntal who projects >50% annual EPS growth for the next 2 years. Thus the upgrade and high price target are based solely on earnings forcasts--not on any intrinsic undervaluation of the company's stock price. In short, this is purely a growth play (and partly hype) rather than a value play, and as such, there is more downside than upside potential. --Drug Doc