Global Investing: German Generics
01/02/2004 12:00 am EST
Vivian Lewis speaks 6 languages, and has spent 18 years abroad as a leading financial analyst. Her MinuteWoman.com is geared toward sophisticated global investors; while her more-accessible Global Investing focuses on international stocks that trade on US exchanges.
"As a bear on the market, I want to increase our exposure to non-cyclical stocks whose profits do not depend on economic expansion - and drug stocks are my pick," My top pick for 2004 is Stada Artzneimittel (STDAF OTC BB), an unsponsored ADR. As a generics firm, Stada will gain from recent German drug benefits reforms, which require that patients pay more of medication costs. The push into generics was a deliberate strategy move. About 5-7 billion (Euro) in drug company patents in Europe will run out, from this year until 2007. That is the main reason for buying a German generics company like Stada. Its current major products are Omeprazol and Ranitidin (for stomach ailments), Naproxen (for pain), Amoxicillin antibiotic, and ACE inhibitor Enalapril.
"Stada reported 9-month unaudited results that were brilliant, with sales up 25%, mostly in its core businesses (generics, branded products and special pharmaceuticals, and earnings before taxes, interest, depreciation and amortization (EBITDA, aka cash flow) up 21%, year-over-year. Stada's board said that it is 'optimistic that the full year 2003 will meet the target of a two-digit rise in sales and profits, and an 8th year of record results.' Moreover, it expects that based on national market policies affecting health which can be predicted on the assumption that current trends do not change, 2004 will see further growth in sales and earnings."