Several large-cap pharma companies are looking to expand their
presence in the lucrative emerging markets in an effort to
exploit higher growth opportunities in those regions.
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Earlier this week,
) increased its holding in its pharmaceuticals subsidiary in
India from 50.7% to 75% through a voluntary open offer. The
transaction is valued at approximately £625 million. The final
payment for the shares is expected to be made by Mar 20, 2014.
The Indian pharmaceuticals subsidiary commercializes
pharmaceuticals and vaccines targeting several therapeutic areas
including respiratory, cardiovascular, oncology, anti-infectives
We remind investors that in Feb 2013, Glaxo had announced that it
had increased its stake in its consumer healthcare subsidiary in
India from 43.2% to up to 72.5%. The offer was worth
approximately £568 million.
The deal is consistent with the company's plans to expand its
Pharmaceuticals segment in emerging markets and looks good to us.
We note that the Emerging Markets and Asia Pacific (EMAP)
contributed more than 25% to Glaxo's revenues in 2013.
However, we remind investors that Glaxo is witnessing a slowdown
in China. Pharmaceuticals and Vaccines sales generated in China
were down 29% in the fourth quarter. Glaxo is facing
investigations and charges of fraudulent behavior and ethical
misconduct leveled by Chinese government authorities. We believe
that any strict action enforced by the Chinese government will
impact Glaxo's top line in the long term.
Glaxo carries a Zacks Rank #4 (Sell). Some better-ranked stocks
Alexion Pharmaceuticals, Inc.
). While Alexion and Alkermes hold a Zacks Rank #1 (Strong Buy),
Actelion carries a Zacks Rank #2.