TEVA: Main Beneficiary of All those Patent Losses

Patent expirations. Its pretty much the worst problem the pharma industry is facing today. There are really only so many combinations you could make out of chemical compounds to make drugs and big pharma firms are getting killed trying to fill up a pipeline. Huge moneymakers like Merck's Fosamax and Pfizer's Lipitor are losing their patents along with a ton of other drugs. IMS Health says that by 2011 some $60 billion worth of drugs will "go generic". And as anybody might imagine then generic manufacturers are going to benefit big time from this trend. Israeli firm Teva Pharmaceuticals is the largest generics manufacturer, and is in perfect position to profit from this. Teva is THE generics maker and is a giant around the world. They have 315 products in therapeutic categories that include antibiotics, cardiovasculars, analgesics, gastrointestinals, fertility treatments, anticancers, central nervous system drugs, and anti-inflammatory and respiratory agents. Its main drugs are Copaxone, for the treatment of multiple sclerosis, and Agilect/Azilect for the treatment of Parkinson's disease. Copaxone is the companys biggest money maker with $1.7 billion in sales in 2007. The huge growth driver in this stock is its huge backlog of Abbreviated New Drug Applications with the FDA. These total up to be 160 currently to add to their 315 portfolio of generic drugs. These generics in the pipeline treat diseases such as Alzheimer's, Parkinson's, and diabetes. This is a real trend and earning are expected to increase by 18% to $2.80/share. With a 20 P/E that is slightly above its current this stock could easily hit $56 in a year. This would yield a solid 20% return. With drugs continuing to get off patent in the next few years TEVA is definitely the place to be.