Health Care and Drug Stocks Poised for Growth

Physician's Money DigestMarch 2007
Volume 14
Issue 3



Health care and pharmaceutical companystocks are poised for a rebound, according toreports by and Morningstar.Major pharma companies could have big breakthroughsthis year, while also offering alternative treatmentsto serious disease states, says.


Sanofi-Aventis' (SNY) weight-loss drug Acomplia,already for sale in Europe, is still awaiting FDAapproval. Acomplia is reported to not only helppatients lose weight, but improve cholesterol and bloodsugar levels. The agency could approve it by April,making way for possible sales of an estimated $300million this year. Other reported uses for Acomplia, inthe treatment of diabetes, for example, could boostsales to $2.8 billion by 2010, according to .

New Players in Tight Markets

Novartis' (NVS) drug, Galvus, for type 2 diabetesis another potential blockbuster. It is slated forapproval within the first quarter of 2007. Taken oncea day, it is reported to enhance the body's ability tolower elevated blood sugar, without causing hypoglycemiaor weight gain.

In Europe, Novartis will introduce Lucentis, whichis reported to be a treatment for macular degeneration;it has anticipated sales of $1 billion by the end of 2008,according to The Motley Fool (

Novartis' other eventual big seller could beTekturna, a member of the first new class of highblood pressure medication launched in almost 10years, according to Barron's. Due for FDA approvalin March, Novartis believes Tekturna can reducehypertension's damage to the heart, brain, and kidneys.Sales estimates for 2007 are lean at only $65million to $80 million, but some analysts project peakannual sales of $3 billion.

Potentially Groundbreaking Treatments


Another potential groundbreaking drug is Glaxo-SmithKline's (GSK) Tykerb. It has been submitted tothe FDA as treating an aggressive form of breast cancercalled HER2-positive and may be the first cancer drugto fight the disease on two fronts, targeting two proteinsthat promote cancer cell growth, says .

Tykerb could get FDA approval in March for thetreatment of advanced breast cancer, with 2007 salesprojected at $200 million. GSK is also testing the drugon the early stages of the disease, and in 5 years, annualsales could hit $1.2 billion, according to the article.


Experts are split on whether the new antidepressant,Pristiq, from Wyeth (WYE) is a significantadvance, says .


However, in April, Pristiq could be approved as thefirst nonhormonal treatment for menopausal hot flashesand night sweats. With aging baby boomers seekingalternatives to hormone replacement therapy, therecould be a huge market for the drug, according to. Analysts are predicting annual sales anywherefrom $500 million to $2 billion by 2011.

Morningstar Equity Research calls the health caresector one of the most attractively valued for 2007.In addition to GSK and Novartis, Morningstar picksinclude Johnson & Johnson (JNJ) and Eli Lilly &Company (LLY).

Broader Health Care Front

Biotech company, Amgen (AMGN) is rated highly,with annual sales and earnings growth expected in thehigh single digits, according to Morningstar.

In the medical equipment sector, Medtronic (MDT)also makes the cut. Implantable cardioverter defibrillatorsales will increase to low double digits through thenext year, as physicians regain confidence in the devices,Morningstar says.

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