Thursday, June 12, 2008

Novartis - first among equals?

Drug sales in the U.S. are increasing at the slowest rate since 1961 and emerging-market revenue is rising four times as fast, giving Novartis and Schering-Plough the best chance for profit growth.

The U.S. pharmaceutical market, the world's biggest, rose 3.8 percent to $286.5 billion in 2007, compared to 17 percent at the start of the decade, with stricter regulators and patent expirations damping sales, IMS Health, a Norwalk, Connecticut- based research firm says. Novartis and Kenilworth, New Jersey- based Schering-Plough are countering the decline by expanding in Asia and South America.

The two drugmakers have an advantage over Merck and Eli Lilly, who generate more than half their revenue in the American market. Basel, Switzerland-based Novartis shares may gain more than 10 percent, said Dieter Winet, who helps manage $54 billion at Swisscanto Asset Management.

The U.S. is ``more and more adverse for the pharmaceutical industry,'' Winet, who is ``overweight'' in his Novartis holding, said in a telephone interview from Swisscanto's Zurich headquarters. ``At the end of the day, why not seek your success in other places? I'm favorable to Novartis, maybe amazingly so.''
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Looks like TRC Capital agree....

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