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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