Wyeth Limited: A Promise Of Good Health BSE 500095; CMP Rs 480 One of the strongest sectoral performance for most of Calendar 2008 has come in from the MNC pharma space. Not only has this sector outperformed the benchmark indices by miles, these concerns run by Indian managers and owned mostly by US based transnationals are solid, cash rich, zero debt and depend upon the Parent organisation's Research pipeline for growth. The Rs 288 crore Wyeth, a part of the $ 18 bn Wyeth USA is a leading example. 2007-2008 after tax profits were a whopping Rs 92 crore (Rs 68 crore) and the corporate has further raised the dividend outgo to Rs 30 per share (Rs 25 per share), with the stock going ex-dividend on August 25th. EPS for the year was Rs 36 which gives the stock a PE of 13, with a near 6 per cent tax free dividend yield. The stock has traded higher in better market conditions and based upon FY11 estimated earnings should ultimately reach a price target of Rs 600. The sectoral representation and market conditions assure a strong performance from Wyeth, even as competitors struggle. Against a Equity of Rs 22.7 crore, Wyeth Reserves stand at Rs 230 crore, and its cash in hand as of close of the previous accounting year was in excess of Rs 200 crore. Considering that the corporate paid virtually no interest, its business is mostly on cash basis with premium category of drugs on offer. The pharmaceutical industry The Indian pharmaceutical market valued at Rs. 27901.99 crores recorded a growth of 14.3 % during the year ended 31st March, 2007. (Source IMS MAT March, 2007). Alimentary Tract and Metabolism products and Systemic Anti-Infectives constituted a major portion (44.84%) of the total market. Other segments like Cardiovascular System and Respiratory System are growing at a fast rate. Operational performance Wyeth maintains its leadership position in Oral Contraceptives, Hormone Therapy, Folic Acid and Depilatory Cream Segments. Opportunities Introduction of the Product Patent regime is a welcome step taken by the Government. However, the overrestrictive interpretation of the scope of patentability and lack of protection of clinical data continue to be causes for concern. The provision for pre-grant oppositions is also a matter of serious concern. The new Drug Pricing legislation is yet to be announced. Increase in the span of price control would work to the detriment of the pharmaceutical industry. Globally Wyeth continues to launch new products. These include Enbrel (etanercept), Prevnar, Benefix (Coagulation Factor IX), Refacto (Antihaemophillic facor), Tygacil (tigecycline IV), Torisel (temsirolimus), Pristiq (Desvenlafaxine), Xyntha (Recombinant), Relistor (methylnaltrexone bromide), and ProMeris. The Transforming Potential of R&D Wyeth is working on Prevnar 13v, Alzheimer's disease with 10 compounds under development, and Oncology (two new products advanced to phase iii trials, Inotuzumab (CMC 544) and Bosutinib (SKI 606). More importantly the US: Global sales mix is now turning in favour of Emerging markets, with ratio for International Sales to US sales to switch to 52: 48, and Q1 CY08 sales up 19 per cent globally. Wyeth limited may turn out to be a good steady performer over the next two year compared to the high beta explosive growth candidates in Real Estate and Banking which swing viciously either way. This stock is not for traders.
Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. -- Posted By Ronald Chisley to Investor Forums at 8/18/2008 01:42:00 PM --~--~---------~--~----~------------~-------~--~----~ Logon at – http://investorline.co.in/blogs/news Learning Center- http://investorline.co.in/blogs/learning Mutual funds - http://investorline.co.in/blogs/mutualfunds Life Insurance - http://investorline.co.in/blogs/lifeinsurance Investor Journal - http://investorline.co.in/blogs/investor Latest News - http://investorline.co.in/blogger/?q=aggregator/categories/ Create your own Forum & Blog at - http://investorline.co.in/blogger To post to this group, send email to [email protected] Visit this group at-http://groups.google.com/group/investor-forums?hl=en -~----------~----~----~----~------~----~------~--~---
