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XMFHelical (< 20)

2015 Best and Worst of Pharma

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January 07, 2016 – Comments (0) | RELATED TICKERS: NVO , VRX , GILD

Since I tend to focus on healthcare investing, I like to look back at performance of certain industry segments.


While pharmaceuticals is only ~ 10% of the healthcare spend, it is very disproportionately the largest segment available for public investment.  There are a couple of 'must reads' each year that I look at for this space.  Both look back to the previous year i.e. 2014 for their 2015 articles.


One is commentary from Contract Pharma
In which they talk about the top 25 pharma and biotech* firms by sales**.  This commentary is usually available late summer.


And then in early fall, there is a very nice 'industry audit' provided by PharmExec.
This audit looks to evaluate which firms are providing the most value to investors via some diverse (and questionable) metrics.  There are some overseas firms that PharmExec does not cover (and Baxter??)


Together these list the top 30 or so firms by 2014 sales**.  It does not take much effort to put them in a spreadsheet and look at the returns these firms provided in 2015.  I have a linked dropbox spreadsheet here for those interested.


Of course there are always changes during the year.  Hospira is no longer independent (to Pfizer) and Allergan and Actavis combined (the latter before the articles went to press, the former after).  Baxter split operations.


The best 'large pharma' was Novo Nordisk with a > 38% return on 2015.  True Japan's Eisia had a better return, but the firm is outside the top 20 and does not have an ADR (OTC available).
The worst?  Much maligned Valeant (VRX) with a > 29% loss.  However, this too is outside the top 20 firms, so with that threshold it was Bayer with just a bit > 6% loss.


Ralph

@helicalinvestor

Long NVO (yay), JNJ (-.6%), GILD (+7.7%), ABBV (-6.4%)


* - There really isn't a distinction anymore between pharma and biotech, especially for the firms with substantial revenues.  Contract pharma used to have separate lists based largely on small molecule vs. biotherapeutic lines, but combined them a few years back since many large firms have both.


** - Contract pharma looks just at pharmaceutical revenues, and PharmExec total revenues, so the sales and rankings are misaligned between the two (JNJ the largest difference).  My spreadsheet starts with the Contract Pharma numbers then uses Pharm Exec for the firms not in the Contract Pharma ranking.

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