International Healthcare Stock Winners From Natcan Investment Management
November 16, 2009 - The Wall Street Transcript has just published Biotechnology Report offering a timely review of the Biotechnology sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Serge Depatie is a vice president, portfolio manager and security analyst at Natcan Investment Management Inc., which he joined in 2003. Mr. Depatie began his investment career in 1999. From 1994 to 1999, he acted as Medical Products Development Director of CQI-Biomed and Marketing and Sales Vice President of Biosyntech. Before arriving at Natcan, he also worked for Hampton Securities and Jitney Group as Life Science Analyst. Mr. Depatie obtained an MBA degree from Concordia University and a BS degree in Engineering from McGill University.
TWST: What about international purchases?
Mr. Depatie: We still hold a company in Israel called Oridion Systems. It's a medical products company that sells CO2 monitors, and they're basically the largest seller of CO2 monitors. CO2 monitors help you understand your pulmonary functions quicker than oxygen monitoring, because CO2 variations give you lung health faster than O2 and they're the largest provider in there. The company was hard hit by the downturn by hospitals, not buying products overall. But the technology is still there and sales came around, so we're very confident in the company. That's one international story that we have. We have a company in Great Britain called Vectura. Vectura is a leader in pulmonary delivery and basically partners with either GlaxoSmithKline (GSK) and Novartis (NVS) and other major companies to develop inhaled drugs for them. That's a company that we own in the UK. We also own large conglomerates such as Roche, which is probably the largest biotech company, and Novo Nordisk (NVO), which is the leader in the diabetes area in the world. These are companies that are outside North America.
TWST: What about the large-cap pharmaceuticals and biotech joint ventures and partnerships with biotech firms? Is that going to continue?
Mr. Depatie: Yes, we saw Pfizer (PFE) buying Wyeth (WYE) and Merck (MRK) buying Schering-Plough (SGP). These are synergies that allow growth for them. I think it's going to continue, and Pfizer has basically softened their patent cliff. They were seeing large patent cliffs on their Lipitor franchise and by buying Wyeth they basically took out the patent cliff on that. So now instead of losing 50% of their sales, they're going to only lose, I think, it's 15%. The company becomes much more attractive, because now it's easier to model new drugs that come in. We can put a growth rate on it and it's a very low valuation at this point. These companies become very attractive when the market has run strong I think, as value investors have really nowhere else to go at one point. That's why actually, in the short term, we have seen some good interest in the pharmaceutical sector. The mergers will definitely continue. As we saw lately, Abbott Labs (ABT) bought Solvay. Abbott is one of the better acquirers in the industry.We're seeing a lot of interest and expertise by pharma in vaccines right now. Everything in vaccines is being coveted and we're seeing large markets. These markets are going to grow in the mid-15% range and that's faster than typical drug markets.
SERGE DEPATIE
Natcan Investment Management Inc.
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