aging population - move toward generic drugs

growth

Another sector with some serious M&A action is Pharmaceuticals, with the major acquisitions occurring in the past month. More recently, one name that has been brought up is Teva Pharmaceuticals (TEVA), who may be in the market to acquire another company. Najarian said the rumor on the street was that Teva was interested in Watson Pharmaceuticals (WPI), which caused the trading volume of the stock to go through the roof today.

I’m concerned about all the variables in this space, explains Pete Najarian. But the name to watch is probably Teva (TEVA). They’re heavily involved in generic drugs and the environment should be good for generics.

In the larger space I like Celgene [CELG], Genzyme [GENZ] and Teva [TEVA] for their pipelines. - Pete Najarian

Outperform - Price 42.49 on Jan. 20
by Cowen & Co.

Teva's 2008 should end on a positive note, given the launch of Pulmicort [an asthma treatment]...Although the Barr acquisition will likely bring roughly five cents to 10 cents a share dilution in 2009, we believe that it should allow Teva to manage through what could have been a very challenging year. We sense that investors are still taking a cautious approach to Teva shares. We do not agree with this caution. 2008-E EPS, $2.82; 2009E-EPS, $2.95 [versus $2.37 for 2007]. Market cap: $33 billion.

If you’re looking for trades keep an eye on the names that get a lot of attention during the upcoming JP Morgan Healthcare conference, Najarian adds. Personally, I like Celgene [CELG], Gilead [GILD] and Teva [TEVA] for their pipelines.

Shares of Jerusalem-based Teva have dropped about 16% from their 52-week high of 50, set in January. The stock traded last week around 14 times consensus 2009 profit estimates of $3.04 a share, versus a median forward P/E multiple of nearly 18. As our colleague Fleming Meeks pointed out in a story on Aug. 29 in Barron's Daily Stock Alert, Teva is well fortified, and insulated from the politics of health care, however that might unfold. Generic drugs will remain important. Also, as of Sept. 30, the company's cash balance was $2.8 billion, giving it plenty of flexibility and liquidity. And Teva isn't only a play on generics. Its branded drugs include Copaxone, which treats multiple sclerosis and whose global third-quarter sales were $562 million, up 28% year over year.

From a recent Mad Money show:"I like the pharmaceuticals. They're not financially oriented and don't need financing to sustain themselves."

saving money

Generic market is not bad at all

Actually a one product company

so much potential