Thursday, February 16, 2017

After A Successful Turnaround, What Propels Lundbeck Further?

Danish pharmaceutical company Lundbeck (OTCPK:HLUYY)(LUN.CO) has done what a lot of sell-side analysts thought they couldn't do - pair new product launches with an operational restructuring and drive a turnaround in the business. With that, the shares have more than doubled over the last three years and have outperformed a large number of the company's European peers (Ipsen (OTCPK:IPSEY) and Actelion (OTCPK:ALIOY) being notable exceptions).

Now the question turns to "what next?" and that is where the story gets a little less rosy. I do believe that there is still upside to the company's core growth portfolio (drugs like Abilify Maintena, Northera, Trintellix, and Rexulti), but most of these drugs have serious entrenched generic competition to surmount, not to mention the risk of competing novel compounds.

What's more, Lundbeck has pared down its R&D efforts to a very focused, but very limited, pipeline and new product launches are not likely to be a major driver in the near term. Further operational outperformance shouldn't be underestimated, but I would expect Lundbeck to settle into a quieter "middle age" now, and the share price appreciation is more in keeping with my typical expectation from a drug stock.

Read more here:
After A Successful Turnaround, What Propels Lundbeck Further?

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