Tulsa World: A promising drugmaker

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A promising drugmaker
A strong dollar isn't always a good thing

A worker holds containers of test tablets made in the Novartis manufacturing facility in Singapore. Novartis saw a recent 8 percent sales increase in local currencies get wiped out by converting to U.S. dollars. Bloomberg News file

By MOTLEY FOOL
Published: 8/17/2009 2:22 AM
Last Modified: 8/17/2009 4:15 AM

Consider pharmaceutical giant Novartis (NYSE: NVS). It managed a solid 8 percent sales increase in local currencies recently, only to see all of that disappear when converted into U.S. dollars, its reporting currency. Sales were down 2 percent.

A major contributor was Diovan, Novartis' blood pressure medication. It may not be as big a household name as Lipitor or Plavix, but it generated $2.9 billion in the first half of the year. Still, just like Lipitor and Plavix, it faces generic competition in the next few years.

Fortunately, Novartis seems to have a solution for the lost revenue: new drugs. Recently launched products, such as its new cancer drug, Afinitor, contributed 16 percent of pharmaceutical revenue recently, up from 10 percent last year.

New growth may also come via follow-on biologics from its generic Sandoz division. While making generic versions of biotech drugs will have a lot of competition from companies such as Teva Pharmaceutical and Merck, Novartis has established itself as a leader in making these drugs and should be at the front of the line when the United States opens its doors.

As long as it can keep growing sales, Novartis looks rather inexpensive, with its relatively low P/E ratio and high dividend yield. By MOTLEY FOOL

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	Report Comment oldnorthroad, (8/17/2009 7:38:23 AM) Maybe now Tulsa can get another Walgreens!!!!!
	Report Comment born okay the 1st time, tulsa (8/17/2009 11:00:40 PM) drugs for the US made in Singapore. WAH, their sales are down. Drug companies hold patents too long as it is, contributing greatly to higher medical costs. Then they push their drugs to doctors, offering vacations & kickbacks for prescribing these meds. & people wonder why the cost of meds are so high. DUH
	Report Comment Thunder196, Tulsa (8/17/2009 11:17:50 PM) born okay the 1st time In article Panel Approves Health Bills "the panel handed the drug industry a victory, voting 47-11 to grant 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases." Your right about the patents.
	Report Comment born okay the 1st time, tulsa (8/18/2009 11:12:20 AM) Exactly Thunder, you found the reference I was looking for. They whine & moan & groan about wanting healthcare reform, then pull a bonehead move like that. 12 years of protection before a drug can be made in generic form. Ridiculous. 12 years people won't be able to afford their outrageously expensive medications while drug companies pocket their profits. Disgusting.THAT is the health care reform America really needs. That & tort reform to get a handle on the frivolous & ridiculous lawsuits doctors are continually hit with, thereby increasing their malpractice insurance. People need to remember doctors aren't gods, they're human.
	Report Comment Alix Smart, (8/18/2009 2:09:22 PM) born okay the 1st time, that is the reform we need, but we can't get past the killing of old people, to talk those points.

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