Australian pharma sector in good health
Almost a year after Australia's biggest medical products recall resulted in the collapse of Pan Pharmaceuticals, the remaining listed drug companies appear in good health, with the four biggest companies at least holding their ground on the stock market.
Almost a year after Australia's biggest medical products recall resulted in the collapse of Pan Pharmaceuticals, the remaining listed drug companies appear in good health, with the four biggest companies at least holding their ground on the stock market.
Sigma and Blackmores have been star performers, while Mayne Group and Australian Pharmaceutical Industries (API) have minor problems. Pan's collapse however, had forced some of the drug sector's smaller companies out of business, leaving fewer players and thus less competition.
According to Macquarie Financial Services associate director Paul Kirchner, investors should be aware of Australia's ageing population and its growing need for pharmaceutical products and health supplements.
Sigma, which recently recorded a 43% in annual profit to A$ 44.2m, is considered by analysts to be the strongest, but investors have been warned not to expect strong share price growth from the sector over the next 12 months. Sigma's acquisition of Herron was one of the reasons for its strong profit growth.
Blackmores, which is a market leader in vitamins and health supplements, benefited most from Pan's demise, and its earnings are still very solid. Mayne shares hit a four-month high recently, despite reports that one of only two possible bidders for its pharmacy services business had withdrawn. It has sold the hospitals business and is cash-rich. Both Blackmores and Mayne are reportedly seeking acquisitions.
API had suffered from a temporary closure of its factory in Sydney in September, which cost it A$ 4m in lost revenue, and has not fully recovered from the set-back.