Top Pharma & Biotech Stock Picks For 1998

Analysts at Credit Suisse First Boston have recently commented on whatthey perceive as the best stock picks for the pharmaceutical and biotechnology industries in 1998 in a conference call. Three pharmaceutical stocks were singled out for attention, with one European company being chosen by London-based analyst Genghis Lloyd-Harris.

Mr Lloyd-Harris said that his favorite stock, using value-based analysis, was Sweden's Astra, which he argues was significantly undervalued, as it trades at a 35%-40% discount to its peers due to concerns over patent expiry for its blockbuster antiulcer drug Losec (omeprazole). The analyst claimed that Astra is "an outstanding value-creating company," with or without Losec, and would still have had the pharmaceutical sector's 10th-highest return on invested capital of 21% in 1996 without the drug.

Astra - Strong In R&D Furthermore, Mr Lloyd-Harris argues that Astra is a research-driven group with an R&D budget of over $1 billion and that products such as Atacand (candesartan cilexetil) and Oxis (formoterol; see Marketletter February 2) "should cushion Losec's decline." He added that the unveiling of perprazole, a single-isomer version of omeprazole, could make Losec's patent expiry a moot point if Astra can convincingly demonstrate the former's superiority.