Report
Dominic Rose ...
  • Naresh Chouhan
EUR 4683.00 For Business Accounts Only

EU Pharma - Time to Add

As the market frets about pricing power, rates & supply chains we show that EU Pharma is worth revisiting as we believe it has been the forgotten sector over the last 18mths. Sector fundamentals have been materially enhanced since COVID struck with sector sales now set to grow 5% CAGR 2021-26 & net income 7% CAGR. Moreover, using our proprietary R&D database we show that drug output has been consistently high for most co’s. This enhanced drug output has come due to a decade of investment which is now normalising and should allow margins to grow by 300bps 2021-26. Despite this, current share prices imply terminal growth rates are negative even as the background level of innovation is accelerating. Sanofi, AZN & Novo are our top picks for the next 12 months.
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Underlyings
AstraZeneca PLC

AstraZeneca is a holding company. Through its subsidiaries, Co. operates as a biopharmaceutical company engaged in discovering, developing, manufacturing and commercializing its pipeline of small molecule and biologic prescription medicines, including targeted business development through collaboration, in-licensing and acquisitions. Co. is focused on three main therapy areas: Oncology, Cardiovascular and Metabolic Diseases, and Respiratory. Co. is also selectively active in autoimmunity, infection and neuroscience. In addition, Co. works across small molecules, oligonucleotides and other drug platforms, as well as biologic medicines.

Novartis AG

Novartis is a multinational healthcare group based in Switzerland. Co. provides healthcare solutions that address the evolving needs of patients and societies worldwide. Co.'s broad portfolio includes innovative medicines, eye care products and cost-saving generic pharmaceuticals. Co.'s operations are organized along three operating divisions: Innovative Medicines Division; Sandoz Division; and Alcon Division. Co.'s operations are supported by the Novartis Institutes for BioMedical Research and Novartis Business Services.

Roche Holding Ltd

Roche Holding is a healthcare company. Co. operates in two Divisions, Pharmaceuticals and Diagnostics. Co.'s pharmaceuticals division is comprised of two business segments Roche Pharmaceuticals and Chugai. Co.'s pharmaceuticals division provides therapies including Cotellic, in combination with Zelboraf for advanced melanoma, and Alecensa for a specific type of lung cancer. Co.'s diagnostics division consists of four business areas: Diabetes Care, Molecular Diagnostics, Professional Diagnostics and Tissue Diagnostics. Co.'s diagnostics division provides in vitro diagnostic tests, used by healthcare providers to screen, diagnose and monitor therapies.

Sanofi

Sanofi is an integrated, global healthcare company focused on patient needs and engaged in the research, development, manufacture and marketing of healthcare products. Two segments make up Co.'s business: Pharmaceuticals and Vaccines. The Pharmaceuticals segment covers research, development, production and marketing of medicines, consisting of flagship products, plus a broad range of prescription medicines, generic medicines, and consumer health products. The Vaccines segment includes research, development, production and marketing of vaccines in five areas: pediatric vaccines, influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines, and travel and endemic vaccines.

Provider
New Street Research
New Street Research

Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.

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Analysts
Dominic Rose

Naresh Chouhan

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