Carl Gardiner has been a financial analyst for over 18 years, including eight years in investment analysis and management. Prior to joining Schafer Cullen Capital Management, he was an investment analyst and portfolio manager at two research-driven, value-oriented investment funds, Copper Arch Capital and North Sound Capital. From 1992 to 2000, he was a Director at Merrill Lynch, as an investment banker in New York and London. Mr. Gardiner began his career at Fox Asset Management, a value-oriented money management firm. He received a MA degree in International Economics from Johns Hopkins School of Advanced International Studies in 1992 and a BA degree with High Honors from the University of Virginia in 1989.

TWST: Would you be able to give us any examples of the type of companies that are like core holdings or new acquisitions?

There are far fewer of those just lopsided, obviously mispriced opportunities, so we are now back more into our normal mode of finding situations that are overlooked. In this vein, the last stock I’d mention is our most recent purchase, Omnicare (OCR). Omnicare trades at a little over 9 times 2009 earnings, with a $2.8 billion market value. Omnicare is the largest institutional pharmacy in the US, serving skilled nursing facilities and assisted living facilities, with a 50% share of this market. There are some interesting things going on at Omnicare that have great potential to boost returns over the next two to three years. Most importantly, having consolidated the industry, the company is finally taking advantage of its scale. Omnicare is nearly through an initiative to automate and centralize certain repetitive functions, so that it can downsize its over 200 regional pharmacies saving over $100mm a year in costs and freeing resource for customer retention activity. Omnicare has a number of other cost-saving initiatives underway as well. Finally, the wave of branded drugs going generic gives Omnicare a gross profit lift, and while this has been underway for the past few years, there is still some runway here.

Prashant Nair is a Mumbai-based Director and Analyst who covers the Indian pharmaceutical, health care and agrochemical sectors for Citi Investment Research.

TWST: Tell me about Dr.Reddy’s (RDY). What is it that you like about them?

Mr. Nair: Dr.Reddy’s is probably one of the best players in the global generics industry in our view, definitely one of the best players among the Indian generic companies. They have a very strong presence in the U.S. and in the Russia-CIS markets. They have a portfolio of products pending approval - not only plain vanilla generic filings, but also a whole lot of patent challenges and limited competition opportunities. So they have products that can help them gain more traction with the trade going forward. It’s a company that is fully integrated in terms of manufacturing, and therefore enjoys the cost advantage that Indian companies have been known for. But at the same time, they have now come to a stage where they have built a certain amount of leverage on the front end in some of the important markets. We think that going forward, this company will potentially grow much faster than most of its competitors in India.

Read more about Prashant Nair’s India Stock Picks in the current Pharmaceuticals Report.

Rik Deitsch, President, CEO and Director of Nutra Pharma (NPHC) talked to The Wall Street Transcript about his company Nutra Pharma.  Click here to read the complete interview.

TWST: Would you please tell us about Nutra Pharma?

Mr. Deitsch: Nutra Pharma (NPHC.OB), for want of a better term, is a biotechnology holding company. We seek out interesting concepts, drugs and devices in the biotechnology field, and we bring it into the Nutra Pharma family. We are especially good at finding diamonds in the rough - companies that are poorly managed and/or undercapitalized, and bring them competent management, qualified business plans and then necessary funding. Utilizing this strategy, we now have two divisions: ReceptoPharm is our drug discovery division and Designer Diagnostics is our medical device division. In ReceptoPharm we have drugs for the treatment of HIV, multiple sclerosis (MS), rheumatoid arthritis, adrenomyeloneuropathy (AMN) and pain. In Designer Diagnostics we have medical devices for the rapid isolation and detection of mycobacteria, which are bacteria that are very hard to culture and grow.

In the October 19 Biotechnology Report, Biotech industry expert Maged Shenouda discusses the outlook for the sector and for investors. Mr. Shenouda is an Executive Director in the health care group of UBS Investment Research, specializing in coverage of large-cap biotechnology companies. An Analyst since 1999, he joined UBS in 2004 from J.P. Morgan, where he had served as a Biotechnology Analyst since 2000. Mr. Shenouda earlier worked as biotech and European Pharmaceuticals Analyst at Bear, Stearns & Co., and as an Associate Pharmaceuticals Analyst at Solomon Smith Barney. Prior to that, he was a Management Consultant with Price Waterhouse, focusing on the pharmaceutical industry, and he served as a Pharmaceutical Sales Representative for Abbott Laboratories. Mr. Shenouda holds an MBA in marketing from Rutgers University and a B.S. in pharmacy from St. John’s University’s College of Pharmacy. He is a registered pharmacist in New Jersey and California.

TWST: What do you expect the sector to look like in five years?

 Mr. Shenouda: We probably will have fewer large-cap names. I think we’ll probably see some acquisitions - I think Biogen Idec (BIIB) is on its way to being acquired at some point, with Carl Icahn involved in the name as well and having put themselves on the block about a year ago. That seems to be a foregone conclusion now. But the big question is at what price will it be acquired? Then we could see maybe one other name going. With one or two names going away, the sector becomes a few large caps with most companies in the mid- and small-cap categories. We’re also going to see more and more collaborations between biotech and pharma and/or large-cap biotech.

Abbott Labs (ABT) recent acquisition of Solvay is a lead indicator for a new wave of acquisitions of Biotech companies by Large Pharmaceutical companies like Pfizer (PFE), Bristol Myers (BMY) and Novartis (NVS) according to Serge Depatie, portfolio manager for NatCan Investments.  One target that Mr. Depatie thinks will make a good acquisition is Orexigen (OREX) which is focused on obesity treatments.

As part of our recent Exclusive 70 page Biotechnology Report we spoke with David A. Katz and Steve Pisarkiewicz of Matrix Asset Advisors. Although they admit to being underweight in health care they have been adding some healthcare companies as of late;

Mr. Katz: On a relative basis, they are now starting to look a lot more attractive. The stocks we like are also businesses that are not going to be as punished by the Obama Administration’s healthcare program, but have been selling as if they were also damaged goods. So our focus has been on growing businesses that are not going to be dam­aged, yet we’re getting them at damaged prices. We’ve mentioned Zimmer earlier; another would be Genzyme (GENZ), which makes life-sav­ing drugs. Typically, ultra orphan products are fairly highly priced, but they save people’s lives. Genzyme’s a company that’s had some company-specific problems and manufac­turing problems and FDA issues, which has left it at about 14 times earnings, when normally it would sell north of 20 times earnings. We are confident that management has been beaten down so much that they are starting to do a better job. They will either produce, or market forces will move them to bring in a new management team. The price is simply too compelling. As we mentioned earlier, we’ve gone from significantly underweighted in healthcare to now underweighted, and our expectation is we will build some positions if the stocks remain at the current prices over the next few months.

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As part of our Biotechnology Report we spoke with Serge Depatie of Natcan Investment Management Inc.  In the report Mr Depatie reports on the swings of volatility in the global healthcare market. He also gives his view on investment trends in the industry;

Mr. Depatie: An important trend we’re seeing is the, I would say, rejuvenation of biotech drugs in antibody classes. Monoclonal antibodies had a big market expansion in the mid to later 1970s to 1980s, and these drugs are being reformatted in a less toxic and more efficient manner. We’re going to see a new wave of these biotech drugs, which should help the larger players to start off with and also to some extent the small biotechs. The leading player is Amgen (AMGN) there and it acts as a flagship to the industry. They have a new drug called denosumab for pre­vention of bone cancer, which represents potentially over a $5 billion market, which would basically reinvigorate the company and send it on a growth path again. If this drug works, and all in­dications are good and as the expectations become high and the stock appreciates well, it should pull all boats in the sector, in that other companies will also do well. We definitely have increased our activity in the biotech sector in the last year.

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As part of our Exclusive Biotechnology Report we spoke with Maged Shenouda, Executive Director, Health Care Group  of UBS Investment Research gave us some great insight into Large Cap Biotechnology and his top picks;

Mr. Shenouda: So right now, we like Gilead(GILD). They have a dominant HIV franchise. Their base business is doing well. We also expect upside from clinical data releases next year with a product called GS 9350, their non-protease booster, as well as elvitegravir, their integrase inhibitor. Combine that with potential changes for HIV treatment guidelines, where patients would be treated earlier at CD4 counts of 500 and less versus 350 currently. This would bring more patients into treatment. So that’s more of a shorter-term commercial upside opportunity.

Then we like Celgene (CELG). We think it’s the best growth story in biotech. Its geographic expansion outside of the U.S. is going to maintain its top-line growth at the top of its peer group. We also expect positive data releases. Specifically, we anticipate positive detailed data from the MM- 015 trial at the ASH meeting in December. We also like Human Genome Sciences (HGSI). We’re excited about the prospects of BENLYSTA, that’s its lead development-stage product for the treatment of lupus or SLE. They had a positive readout with the first Benlysta Phase III trial. We think that they are likely to have a positive readout with the second Phase III trial, called BLISS- 76, reading out in November. We also believe this is a strong acquisition target.

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In our recent report on Medical Devices  Edwards Life Sciences was a top pick of Kristen M. Stewart,Vice President and Senior Analyst , Credit Suisse  and here is why ;

Ms. Stewart: One company that I like at the present time is Ed­wards Lifesciences. It’s more of a mid-cap cardiovascular company. They are developing a new product, it’s called the transcatheter heart valve. They are selling it in Eu­rope and are in clinical trials in the United States. It’s really one of the largest areas of new innovation. I think transcatheter heart valves can certainly be the next big thing in medical devices. It could be a multibillion-dollar market opportunity for a company of that size; that is very significant. These valves can really drive accelerating top- and bottom-line growth.

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Our featured interview this week is with Zynex, Inc.(ZYXI)

The complete interview with Thomas Sandgaard, President & CEO, is now available.

Zynex, Inc. engineers, manufactures, markets and sells its own design of electrotherapy medical devices in two distinct markets: standard digital electrotherapy products for pain relief and pain management; and the NeuroMove(TM) for stroke and spinal cord injury (SCI) rehabilitation. Zynex’s product lines are fully developed, FDA-cleared, commercially sold, an have been developed to uphold the Company’s mission of improving the quality of life for patients suffering from impaired mobility due to stroke, spinal cord injury, or debilitating and chronic pain.