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TMFHelical (99.12)

Roche Halts Some Drug Deliveries

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September 19, 2011 – Comments (1) | RELATED TICKERS: JNJ , NVS , MDT

This is starting to play out like an Ayn Rand Novel.  I fully expect there to be even more polarization over the pharma industry, and its responsibilities vs. its need to innovate and turn profits.  Today in Pharmalot there was yet another story about the increasing difficulty pharma companies are having with Greece, and apparently the EU.  I blogged in late August that Greece had apparently paid some pharma with government bonds, and Roche was quite public about this amounting to a discount on top of the negotiated prices of the mediciations.

Well, Roche has had enough of that.

Roche Halts Delivery To Greece Over Payments

Roche is no longer sending meds for cancer and other afflictions to state-owned hospitals that have not paid their bills and the drugmaker may do the same in other countries, such as Spain, Italy and Portugal, where bills are going unpaid.

This is not good, and likely to get worse.

As a result of this development, and the foreboding I feel from it, I cut back on the companies I owned that have a great deal of European exposure.

I had bought both Novartis and Medtronic, and added to my JNJ on 8/8, and sold each of those positions on 9/6.  I still own JNJ, but cut it back to the pre-8/8 level.  This resulted in a cummulative gain of $29.14 (ignoring captured dividends), not so great, but better than a loss and I'd rather have the cash handy than hold the positions right now.  I also let UNH go to increase cash.  UNH was bought on the hope that they would restablish their upward trend as health reform gets closer to implementation, and the business environment further clarifies.  I still want to get an insurer in the port (Wellpoint may be a better choice than UNH), but am in no hurry and prefer the ~20% cash position I now have, as I lack macro confidence.

One other item that is not playing out well is that I  added to my position in PPDI on 8/23.  Rumors of a pending buyout looked like a promising arbitrage opportunity, so I increased my position from 150sh to 350.  With the appointment this morning of a new CEO, the liklihood of a near term buyout appears diminished and the stock has sold off significantly.  It is now ~16% of port.  While I consider PPDI a high quality company, that is a bit too much, but I would prefer to not be reactionary with what to do with the holding. The port mid-today is at ~$57370, still up 14% ytd, which is hard to be too upset with.

 

TMFHelical

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1 Comments – Post Your Own

#1) On September 19, 2011 at 12:59 PM, Frankydontfailme (28.06) wrote:

Thanks for the post, scary indeed.

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