Buffett & Berkshire Hathaway BioHealth Stocks (BRK-A, BDX, GSK, JNJ, SNY)
Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) is still a holder of some drug companies and medical devices companies. Here are the Berkshire Hathaway biohealth positions as of September 30, 2009:
- Becton Dickinson & Co. (NYSE: BDX) 1.2 million shares, same as last quarter.
- GlaxoSmithkline (NYSE: GSK) 1.51 million shares, same as before.
- Johnson & Johnson (NYSE: JNJ) was just over 36.91 million shares; Same as last quarter and still well under the 62 million shares at one point in 2008… probably held more as a consumer goods rather than for medical device and drug exposure.
- Sanofi Aventis (NYSE: SNY) more than 3.9 million shares, same as before.
Warren Buffett’s newest full stock holdings in Berkshire Hathaway Inc. (NYSE: BRK-A) are available here.
JON C. OGG
BioHealth Job Cuts Keep Coming (AZN, PFE, BSX, BMY, LLY, JNJ)
It used to be that pharmaceutical jobs and medical device maker jobs were among the best and most immune of all sectors in the economy. They paid well, there was job security, the benefits were solid, stock option and retirement plans were always growing, and on. That is still the case in many positions inside those companies. But mergers, competition, efficiency, redundancy, and a new spending environment are changing this for many jobs in these once-safe sector.
Mergers have led to many “efficiencies” to be realized, and allowed “redundancies” (i.e. low-yield jobs and departments) to be eliminated. And now there is an ongoing threat to the sector from Washington. While the target has gone away from all of healthcare to health insurance, we are still seeing the announcement from major companies of more job cuts. We have compiled a few of the latest found announcements, ad this is just a part of the whole pie.
AstraZeneca PLC (NYSE: AZN) is reportedly offering buyouts “to thousands of its near-5,000 workers” from its U.S. sales force.
Pfizer Inc. (NYSE: PFE) has outlined more job cuts from its Wyeth combination as part of a projected 15% cut to the combined Pfizer-Wyeth team. What this number will ultimately come to is still unknown, and Pfizer’s head count had already fallen by over 6,000 to 75,400 at the end of last quarter.
Boston Scientific (NYSE: BSX) had job cuts a couple years ago, and it appears that the job cuts may not be over. Recent health reform legislation from the Senate Finance Committee was noted by its CEO as being an event which could potentially trigger another 1,000 to 2,000 job cuts.
Bristol-Myers Squibb Co. (NYSE: BMY) has been in an ongoing 10,000 layoff mode since last year, but in the last week came word that about 25% of its Abilify antipsychotic drug sales force after an evaluation from its co-marketing pact with Otsuka Corp. These were recent cuts and are still unquantified.
Eli Lilly and Co. (NYSE: LLY) announced last month that it is targeting $1 billion in savings… with the elimination of up to 5,500 jobs total by some time in 2011.
This summer came the announcement from Johnson & Johnson (NYSE: JNJ) about its plan to cut up a range of 3,615 to to 4,800 jobs. That is a small amount considering the number of deals it has made and considering it has 120,000 employees.
JON C. OGG
OCTOBER 20, 2009
Big Setback In Lasers for Wrinkles, Cellulite, and Acne (PMTI, JNJ)
Palomar Medical Technologies Inc. (NASDAQ: PMTI) has seen better days. The company disclosed that Johnson & Johnson (NYSE: JNJ) dropped its partnership and licensing for Palomar’s home-use light-based devices used to reduce or reshaping body fat including cellulite, reducing skin aging appearance, and the prevention of acne.
J&J cited the primary reason for dropping the partnership as being “weak economic conditions” in the disclosure. The sad part about this is that the new development is probably going to put a serious dent in the market for home-use lasers. We were never contacted back by company representatives over pricing of models in June, but Palomar’s $120+ million cash arsenal is probably going to be used up faster now on a standalone basis if it cannot secure a new partner. And J&J probably would not have dropped the deal if sales were tracking well.
The full description of the news is available at 24/7 Wall Street, but the damage is being done to the stock. Palomar shares are down some 15% at $12.90 on the news. and it is seeing exponential trading volume.
JON C. OGG
OCTOBER 16, 2009
Warren Buffett's Healthcare Stocks (BRK-A, SNY, GSK, JNJ, BDX, UNH, WLP)
Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) still holds healthcare and medical and drug related companies in the Berkshire Hathaway portfolio. Of these, some are health insurance, two are drug, one is a medical and consumer products conglomerate, and one is medical products. Any changes in the position notes are during Q2 for the period ending June 30, 2009 and are compared to Q1.
Buffett’s got some drugs. Sanofi Aventis (NYSE: SNY) is more than 3.9 million shares, which looks same as Q1. He holds GlaxoSmithkline (NYSE: GSK) as 1.51 million shares, also the same as before.
Johnson & Johnson (NYSE: JNJ) is one we think Buffett holds for its consumer products mostly, but he has grown his stake here to rival what it once was. The new holdings are about 32.5 million. This is above the prior 28.6 million shares from Q1 but still way down from the 62 million last year.
Becton Dickinson & Co. (NYSE: BDX) appears to be a new holding over last quarter according to our records. Berkshire holds 1.2 million shares, even though the Fed Filing listed this one as “Beckton Dickson” in the filing. B&D is a medical technology company that develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products.
Buffett still has some health insurance operators, although he has lightened up here from a quarter ago. Wellpoint Inc. (NYSE: WLP) is 3.5 million, which is down from the 4.7773 million shares in Q1. United Health Group (NYSE: UNH) was listed as 4.5 million, down from over 6 million in Q1.
Since Buffett is getting closer and closer to 80 years old, he’s probably getting more interested in various aspects of healthcare as each day passes.
JON C. OGG
AUGUST 14, 2009
FDA Hits TNF Blockers (JNJ, ABT, AMGN)
The FDA has announced that it will make drug makers disclose added risks of lymphoma and other cancers on TNF Blockers in a Boxed Warning notice. This pertains to tumor necrosis factor drugs called TNF Blockers associated with the use of drugs for children and adolescents.
- Johnson & Johnson’s (NYSE: JNJ) makes Remicade;
- Abbott Labs (NYSE: ABT) makes Humira;
- Amgen (NYSE: AMGN) for Enbrel.
Cimzia, a Crohn’s Disease treatment made by UCB in Belgium, is also going to have the label.
Most of the drug labels did previously discuss a possible risk of cancer, but a new cancer-related warning will now be added to the warning box that is already on the drug packaging. These TNF blocker drugs treat Crohn’s disease, juvenile arthritis, rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, and a form of arthritis that eventually fuses the spine. The drugs suppress the immune system by blocking the substance in the body that causes inflammation.
The FDA is working with these companies to define the higher risks of cancer in children and adolescents in this matter. It is unclear if this will have any adverse effect on the sales of these drugs. Unfortunately, those taking the drugs may need the drugs regardless of the Boxed Warning risks.
JON C. OGG
AUGUST 4, 2009
Angiotech gets a second wave of positive FDA news (ANPI, JNJ, ABT, MDT)
Angiotech Pharmaceuticals (Nasdaq: ANPI) on Thursday got the FDA’s OK to market a next-generation drug-coated stent with partner Boston Scientific (NYSE: BSX), a deal that might help it prop up its declining stent business.
The new Taxus stent is designed for long lesions — situations that typically required the use of multiple stents previously, or in some cases old-fashioned angioplasty. The company says it is a more efficient treatment option for the estimated 8 to 10% of patients with long lesions, and plans to launch the product next month.
The new announcement may help Angiotech deal with brutal stent competition. The company’s royalty revenue from stents fell 40 percent in the first quarter to $17.1 million.
The new longer stent might be of particular use as the company seeks to take market share from Johnson & Johnson (NYSE: JNJ), Abbott Laboratories Inc. (NYSE: ABT) and Medtronic (NYSE: MDT).
The Angiotech stent announcement comes on the heels of an FDA approval last month for the company’s implantable device to prevent pulmonary embolism. It’s a string of good news for a company that earlier this year said might be forced to seek alternate funding or a potential reorganization or debt restructuring due to continued stent market declines.
Late last year, Angiotech was seeking strategic options. At the time, it was not clear that the debt-saddled firm would survive. The stock has since climbed more than 10-fold to more than $1.80 a share . — Mike Tarsala
Angiotech gets a second wave of positive FDA news (ANPI, JNJ, ABT, MDT)
Angiotech Pharmaceuticals (Nasdaq: ANPI) on Thursday got the FDA’s OK to market a next-generation drug-coated stent with partner Boston Scientific (NYSE: BSX), a deal that might help it prop up its declining stent business.
The new Taxus stent is designed for long lesions — situations that typically required the use of multiple stents previously, or in some cases old-fashioned angioplasty. The company says it is a more efficient treatment option for the estimated 8 to 10% of patients with long lesions, and plans to launch the product next month.
The new announcement may help Angiotech deal with brutal stent competition. The company’s royalty revenue from stents fell 40 percent in the first quarter to $17.1 million.
The new longer stent might be of particular use as the company seeks to take market share from Johnson & Johnson (NYSE: JNJ), Abbott Laboratories Inc. (NYSE: ABT) and Medtronic (NYSE: MDT).
The Angiotech stent announcement comes on the heels of an FDA approval last month for the company’s implantable device to prevent pulmonary embolism. It’s a string of good news for a company that earlier this year said might be forced to seek alternate funding or a potential reorganization or debt restructuring due to continued stent market declines.
Late last year, Angiotech was seeking strategic options. At the time, it was not clear that the debt-saddled firm would survive. The stock has since climbed more than 10-fold to more than $1.80 a share . — Mike Tarsala
Abbott Labs rubs academia the wrong way — again (ABT)
All of a sudden, Abbott Laboratories (NYSE: ABT) appears to be making powerful academic enemies.
The Des Moines Register reports this morning that Abbott Laboratories (NYSE: ABT) is being sued by the University of Iowa for allegedly using a professor’s DNA cloning technique without permission.
According to the suit, Abbott allegedly used the technique to manufacture blockbuster drugs including Humira for rheumatoid arthritis and Crohn’s disease. Humira accounts for about 15% of Abbott’s total revenue, and did $4.5 bln globally in 2008. The drug costs nearly $20,000 a year.
The suit follows allegations earlier this week that Humira was made using technology developed by New York University. That NYU technology is licensed to Johnson & Johnson’s (NYSE: JNJ) Centocor unit. As a result, JNJ in a U.S. cout said it believes it’s entitled to a $2.1 billion share of Humira revenue. – Mike Tarsala
Large drug stocks gain on volume (MRK)
Large drug stocks are testing four-month highs in early trading this morning, and are among the strongest stock groups.
Most of the big names in the group including Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Eli Lilly & Co. (NYSE: LLY) and Abbott Laboratories (NYSE: ABT) all are trading higher in the early going.
One of the stocks to watch could be Merck & Co. (NYSE: MRK), which has lagged its peers’ relative strength in recent sessions. It has further to go to challenge its June highs, vs. most of its peers.
While Merck has not enjoyed very strong analyst sentiment even compared to its large drug stock peers, it stands out based on relative valuation, trading at about 8 times forward 12-month earnings expectations, vs. more than 10 times for peers such as JNJ and ABT.
It may benefit most from the positive group sentiment.
Obama Keeps Target of Generic Biologics: Focus on Anemia (AMGN, JNJ, NVS)
Politics and healthcare are two words which bring about unquantifiable risks for many biohealth investors. In President Obama’s speech today, he did say how he wanted biologic drugs to have an easier path for generic competition in the field. This is not necessarily a new call from the administration, but it is a continued push against the biotech field. That was a broad statement where you never know how far it can or how far it will ultimately go. But the president did specifically note anemia as a target for the generic competition. Again, this is a repeat, but it means a further direct push that is not being let up on. That puts Amgen Inc. (NASDAQ: AMGN) for its Aranesp and Epogen as a front and center assault target of the administration if you take the statements at face value.
Amgen generated $15.003 billion in 2008 total revenues. Its growth petered out as the 2007 revenues were $14.771 billion and the 2006 revenues were $14.268 billion. Aranesp, for the treatment of anemia associated with CRF (both in patients on dialysis and patients not on dialysis), had global sales of $3.1 billion for all of 2008. EPOGEN, for the treatment of anemic adult and pediatric patients with CRF who are on dialysis, sales in the United States were roughly $2.5 billion for each of the last three years.
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