How are high-tech pharmaceuticals similar to Kraft's (
) Macaroni & Cheese?
[caption id="attachment_38393" align="alignright" width="240"
caption="America: exporting our pill-popping ways to emerging
They're both good ways for savvy investors to profit from the
growth of the middle class in emerging markets.
The recent $3.5 billion bid for Amlyn Pharmaceuticals (
) by Bristol Myers Squibb (
) is a perfect example of Big Pharma positioning itself for the
world's changing demographics.
The global population is aging, especially in affluent nations
like Japan and Germany, and accordingly requires increasing amounts
of health care goods and services. This is particularly true of the
pharmaceutical products which biotechnology firms produce.
Economic growth around the world will also increase the need for
biotechnology and pharmaceutical products. It's another example of
how the expanding middle class is an
Generic drug companies such as Teva Pharmaceuticals Industry (
) and Dr. Reddy's Laboratories (
) are especially well-positioned to benefit from the trend,
due to increases in health care costs far outpacing
inflation - forcing many to save with generic products.
Year to date, Teva Pharmaceuticals has risen 11.89%. On a
quarterly basis, sales are up almost 30%. Sales and
earnings-per-share growth is also in the double digits for Dr.
Reddy's, and its price-to-earnings growth ratio is a bullish
The wealthiest countries spend the most on health care, led by
the United States and the richest European nations. As consumers
around the world become more affluent, it is inevitable that they
will spend more for better health. They'll live longer, and TEVA
and RDY shareholders will prosper.