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Article: Glaxo suffers as drugs giants are cut to size
- Article from:
- The Independent (London, England)
- Article date:
- June 14, 2008
CopyrightCopyright 2008 The Independent - London. Provided by ProQuest LLC. (Hide copyright information)
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THE WEEK IN REVIEW
Earnings at the drugs giant GlaxoSmithKline will almost certainly
be down this year. With the stock falling from 1385p in January,
investors are wising up to the fact that pharmaceutical stocks are
not a safe haven, given patent challenges and the rise of generics.
Dresdner Kleinwort says that at 1065p, GSK trades at 10 times
estimated 2009 earnings, fair given a sector weighted average of
10.7. It thinks, too, that emerging market potential means the drugs
industry is 30 per cent undervalued.
However, the patent for GSK's asthma blockbuster Advair expires
in 2010, and there's no new blockbuster in the offing. Investors
will not have a happy time with GSK, short term. Sell.