AstraZeneca: Value in pharma


by Charles Mizrahi, editor Hidden Values Alert

AstraZeneca PLC (AZN), a global biopharmaceutical company, is our latest Prime Time Portfolio featured update.

AstraZeneca's medicines include antibiotic, Merrem/Meronem and Losec/Prilosec for acid related diseases. Here's why we continue to like the shares.

AZN’s recent drop off can be attributed directly to the loss of exclusivity on several brands, increased competition from generic alternatives and the struggling European market.

Despite that, we are still up 15% since we added AZN to our portfolio back in December 2010 and continue to see bright things in the company’s future.

Strong cash flow: AZN was able to return $3.7 billion to shareholders in 2011 due to their excess cash. They continue to be aggressive buyer of their stock and plan on spending $4.5 billion on buybacks this year alone.

Stability: Three of the their key drugs posted more than $13 billion in sales over the past few years, which made up for approximately 40% of the company’s total sales.

Those patents are not set to expire for another 4 years, which should give the company stability while they try to build up the other key drugs in their large portfolio.

New products: AZN is in the process of developing several key drugs that experts believe can develop into multi-billion dollar products.

For example, the company recently received the approval of their new cardiovascular drug Brilinta, and they believe they have created a niche for themselves in the cancer treatment market with a product that will better treat stomach and esophageal cancer.

There are no competitors using a drug like this today, and if AZN is successful in developing this drug they would take a firm hold of the cancer market.

Penetrating the diabetes market: AZN recently took a step forward in penetrating into the diabetes market, which is one of the largest in the industry. They recently partnered with Bristol-Myers Squibb to develop a new drug for type 2 diabetes treatments.

In addition, BMY’s recent purchase of Amylin, a biopharmaceutical company that focuses strictly on diabetes treatments, allows both BMY and AZN to develop and commercialize all of AMLN’s products as well.