Pharma Stocks Still Solid: Kraws
Jeffrey Kraws, managing director and pharmaceutical analyst for Gruntal & Co., delivered a clear message at the November meeting of the PMCQ: pharma companies are still among the most reliable stocks to hold.
Coming as it did in the wake of the stock market flux caused by the September 11 tragedies, Kraws’ positive message was attentively absorbed by the packed house at the Dorval Hilton.
Although the November pharma stock meeting is a time-honored PMCQ tradition, this was Kraws’ first presentation. After 18 straight years of entertaining and advising the PMCQ, Merrill Lynch’s Dick Vietor moved on to other pursuits, but not before he recommended that the club invite Kraws for future events.
As the assembled audience tried to keep pace with frenzied note-taking, Kraws delivered his picks for the best stock performers for the coming year. He prefaced this year’s picks by mentioning that his late-2000 predictions grew 89% over the past year.
Among the major pharma companies, Kraws singled out Pfizer as a stock to continuing holding, as the company shows no signs of slowing down. Indeed, he pointed to Pfizer’s $4 billion annual R&D budget as the key indicator of the company’s continued strength. “Four billion dollars buys a lot of test tubes and a lot of mice,” he mused. “No wonder there are no rats left in New York City.”
Other larger companies Kraws recommended included Schering-Plough, which he predicted would soon be “going bye-bye” (i.e., gobbled up by a larger company), and Johnson & Johnson, which he said succeeds through “breadth of diversity, yet strength in nothing.”
Smaller players for which Kraws predicted growth in 2002 are Women First HealthCare (Nasdaq: WFHC), King Pharmaceuticals (NYSE: KG) and Kos Pharmaceuticals (Nasdaq: KOSP). In the high-risk, high-reward category, Kraws included two Canadian companies: Draxis Health (TSE: DAX) and Aeterna Labs (TSE: AEL). Among generics, the top two companies to hold, according to Kraws, are IVAX (AMEX: IVX) and Mylan (NYSE: MYL).
Apart from presenting his top stock picks, Kraws also provided reassurance to the ethical drug manufacturing sector. Proposed U.S. legislation that would allow drug reimportation will not be passed, he said. “It’s never going to happen. It’s an abuse of patent laws. It would be like allowing knock-offs of patented Dell computer products to be re-imported to compete against Dell in the U.S.”
Kraws also said that despite industry restructuring and what he termed “imminent major layoffs” in the industry, marketers would not be among those directly affected by the cuts. Indeed, he stated that “What marketers do determines the success of the company. To expect doctors to keep up with pharmaceutical developments is ridiculous. It’s up to marketers to boil it all down for them.”
By Scott Moffat
Scott Moffatt is president of Pharm Team Communications, an Ottawa-based firm providing custom writing, editing and transcribing services to Canadian health-care and pharmaceutical stakeholders. He can be reached at firstname.lastname@example.org