Sunday, August 5, 2012

Patent cliff: forget it and continue speculate!

A very interesting article which basically illustrates and describes that stock price has nothing to do with the fundamental state of the business.

Anyone waiting for Big Pharma to stumble on the industry's so-called "patent cliff" has been heartily disappointed. In spite of many high-revenue products facing patent expirations in the next few years, the group continues to be a top performer, lifting the health care sector to a market-beating 9% gain by the end of July.

That bullish movement has come as a surprise to many analysts and investors because of the industry's pending patent cliff, with more than $33 billion in patented drug sales set to expire in 2012 alone. This includes blockbuster drugs like Pfizer's (NYSE: PFE : 24.17, 0.22) Lipitor, which brings the company annual sales of $11 billion and Bristol Myer Squibb's (NYSE: BMY : 32.645, 0.055) Plavix, the world's top-selling medicine, which generated more than $7 billion in 2011.

But though the industry will face headwinds related to the impending patent expirations, world-leading pharmaceutical companies are still positioned for big gains on a number of other long-term trends. And investors can benefit in a big way as well.

However the author is trying to explore a fundamental analysis of the following nature:

In a report titled "World Population Aging: 1950-2050," the United Nations says global population aging is unprecedented in human history. The 21st century will witness even more rapid aging as medical technologies extend life expectancies, the U.N says. And by 2050, 1.5 billion, or 16% of the global population will be above 65 years old, according to the Central Intelligence Agency. These older citizens will likely require higher levels of health care, which will provide a tailwind to the industry and Big Pharma companies with a global reach.


Well, the numbers can be right but the stock price does not care about them – it can go up or down despite your knowing the numbers.

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