Drug Stocks to Buy: New Statin Guidelines Are a Shot in the Arm

Source:

"Over the last five years, statin prescriptions in the United States have grown nearly 20% to 264M a year. Total global sales of cholesterol-treating medicines, including statins, were $35B last year, according to IMS Health. Statin sales amounted to $29B worldwide and $10B in the United States."

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News out of the medical world is making a certain group of pharmaceutical companies among the most promising drug stocks to buy now.

The American Heart Association and the American College of Cardiology on Tuesday released new guidelines for the way doctors treat high cholesterol. Industry experts at the highly respected Cleveland Clinic say the new guidelines could double the number of people on medications to lower their cholesterol.

The biggest change calls for a focus on risk factors rather than just cholesterol levels. The updated recommendations encourage doctors to consider age, weight, blood pressure, and things like whether a patient smokes or has diabetes.

"We really focus on those most likely to benefit," Dr. Neil Stone of Northwestern University, chair of the committee that wrote the new guidelines, said in a statement. "We were not concerned with treating more or less people. We were concerned with treating the people who would benefit the most."

About one-quarter of Americans over 45 now take statins, cholesterol-lowering drugs, a number set to grow. The new recommendations mean an estimated 33 million Americans who don't have cardiovascular diseases, but have a 7.5% or higher risk for heart attack or stroke over the next decade, are likely to receive a prescription for statins.

The aim is to reduce the number of people at risk for cardiovascular-related disease and death. Heart disease is the No. 1 killer of men and women in the United States. One in four deaths, or roughly 600,000 annually in the United States, is attributed to heart disease, according to the Centers for Disease Control and Prevention.

Additionally, some 700,000 Americans suffer heart attacks every year and another 130,000 die from stroke. Costs associated with coronary heart disease in the United States-from healthcare costs to lost productivity-exceed $100 billion.

The Billion-Dollar Statin Market

Statin drugs are already a profitable niche of the drug market.

They're prescribed to about 15% of U.S. adults. Costs range from roughly $12 a month for the least expensive generic versions to $200 a month for the priciest name brand, data from Consumer Reports shows.

Over the last five years, statin prescriptions in the United States have grown nearly 20% to 264 million a year. Total global sales of cholesterol-treating medicines, including statins, were $35 billion last year, according to IMS Health. Statin sales amounted to $29 billion worldwide and $10 billion in the United States.

Launched in early 1997, Pfizer Inc.'s (NYSE: PFE) Lipitor (nicknamed turbo-statin) became the best-selling satin drug just three years after its debut. Even more impressive, it went on to become the best-selling drug in the history of pharmaceuticals.

Despite losing patent protection and a growing generic market, Lipitor (which lost patent protection in late 2011), together with Merck's Zocor (whose patent expired in 2006), still accounts for 57% of the 264 million cholesterol prescription pot.

As additional patents expire, the generic share of the global statin market is projected to soar to 34% by 2018, up from 11% in 2011, GBI Research reports.

New Guidelines a Prescription for Pharma Profits

Besides Pfizer, AstraZeneca PLX (NYSE: AZN) is another Big Pharma raking in gains from the statin market. Its cholesterol-lowering drug CRESTOR was the most prescribed drug in the United States over the last 12 months, according to a new report from IMS Health. New prescriptions and refills of the drug totaled 23.7 million.

The patent on CRESTOR doesn't expire until 2016, so the new guidelines will benefit AZN. CRESTOR has received regulatory approval in more than 100 countries and is backed by clinical research that spans 13 years, including more than 120 ongoing or complete clinical trials that include more than 67,000 patients worldwide.

But the biggest winners will be makers of lower-priced generics. Those include Mylan Labs (Nasdaq: MYL) and Teva Pharmaceuticals Indus Ltd (NYSE: TEVA).

  • Mylan Labs, a leading global generic and specialty pharmaceutical company, received final FDA approval for the cholesterol medicine fluvastatin, the first generic version of Norvatis AG's (NYSE: NVS) widely prescribed Lescol capsules, in 2012. The product is approved for both heredity and non-familial high cholesterol. It's also approved for the secondary prevention of cardiovascular disease. Latest figures available put sales of Lescol at around $27.9 million. Mylan, headquartered in Pennsylvania, provides products to customers in approximately 140 countries. It maintains one of the industry's broadest and highest quality product portfolios, which are regularly bolstered by an innovative and healthy product pipeline. Its worldwide workforce is some 20,000 strong. According to Thomson/First Call, of the 10 analysts that follow the stock, three rate Mylan a Buy, one an Overweight, three an Outperform, one a Market Perform, one a Perform, and one an Average on shares. Daily volume averages around 3 million, and shares are on an upward trajectory.
  • Teva Pharmaceuticals Indus Ltd (NYSE: TEVA) received FDA approval in 2006 to sell a generic version of Merck & Co Inc.'s (NYSE: MRK) blockbuster cholesterol drug Zocor. Simvastatin versions were initially priced about 30% less than Zocor. Over the next year, prices plunged as much as 90% from $3 a pill to about $0.30 a dose. The falling price saved insurers and patients billions and cost Merck a similar amount. It also advanced Teva's bottom line. Presently, simvastatin sits at No. 9 on the list of Top 20 Generic Drugs Worldwide. Latest figures show the drug generated 1.64 billion in sales for Teva. That number will unquestionably grow under the new recommendations. Shares of the Israel-based company boast a market cap of $36 billion and 4% yield.

Diane Alter
Money Morning

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