July 8th, 2011
GSK Plc near term prospects
Guide to Dividend Investing released
In this issue of Dividend Alerts we are taking a closer look at GSK’s near term prospects as well as the recently published Guide to Dividend Investing.
GSK’s promising pipeline and prospects
During the last few years GSK’s share price has been trading in a clear share price channel between 1000p and 1350p as investors wondered how the group would replace profits from former “blockbusters” hit by patent expiries and competition from cheaper “generic” medicines.
What is all the fuss about Advair?
Falling US demand for GSK's main asthma treatment – Advair – that accounts for 25 per cent (approx £5bn) of GSK’s sales, as well as European austerity measures and health-care reforms in the US has worried investors for some time.
Advair is an inhaler which delivers two drugs that open the lung passages and prevent inflammation that can trigger future asthma attacks and shortness of breath, is by far GSK’s biggest product and one of the world’s top-selling drugs.
Advair’s basic drug-substance patent lapsed in September, 2010, but patents on its delivery device extend as far out as 2016.
Recent comments from GSK’s Research & Development boss Slaoui confirmed that Advair sales are safe from generics, at least for the time being. While also confirming that generic rivals to Advair's treatment for asthma and smoker’s cough will be introduced in the next few years, these “can hope to capture only a very small fraction of its sales”, according to Slaoui.
Strongest pipeline in the industry
Slaoui also confirmed that GSK is on the rebound with a strong lineup of experimental medicines. “We now have 32 Phase III trials for 22 to 23 different indications; this is a first in the industry”, according to Slaoui, noting that GSK will release results from the various trials as they become available between now and the end of 2012.
GSK’s pipeline include potential new blockbuster drugs such as new heart disease and melanoma drugs that Slaoui predicted could transform treatment. GSK is also developing an array of new medicines for asthma and chronic obstructive pulmonary disease (COPD) — a term for smoker’s cough and chronic bronchitis — that should preserve its industry leadership in respiratory medicine, according to Slaoui.
Super Advair in the pipeline
GSK and its US partner Theravance Inc are developing a follow-up combination product for Advair called Relovair, already described as “Super Advair” which Wall Street deems capable of generating annual sales of almost $2 billion by 2017, if it is approved.
GSK is confident ongoing late-stage trials will prove Relovair superior to Advair in treatment of both COPD and asthma, Slaoui said. “It works within minutes, versus within a few hours (for Advair) and is a once-daily medicine, while Advair is twice a day medication,” Slaoui said.
Experimental drugs pipeline
Slaoui said one of GSK’s most promising experimental drugs is Darapladib, which is meant to prevent the rupturing of plaque in heart arteries that can lead to heart attacks and strokes. It blocks an enzyme called Lp-PLA2.
Apparently some Asians lack the enzyme or have a mutation in its gene that hampers the enzyme’s activity. As a result, they have a 20 percent to 35 percent reduced risk of heart attack and stroke. “If our drug reduces risk by a very high percentage, by 20 percent or something like that, it will be a total game changer” in treating heart disease, Slaoui said.
Another drug to keep a close eye on, he said, is a therapeutic vaccine meant to treat metastatic melanoma. It blocks two genes — BRAF and MEK — and has potential to become the preferred drug for the hard-to-treat skin cancer, he said.
While GSK’s share price has been trading in a clear share price channel between 1000p and 1350p, in the past few years, a share price break-out is on the cards.
Increasingly, the market is recognising GSK’s potential in its defensive pharmaceutical portfolio of businesses. Also, don’t forget GSK’s consumer-health division and the company’s progress in developing markets.
With forecast long-term sales growth of 4 per cent a year, producing annual earnings growth of 9 per cent (on a per-share basis), the shares currently yield about 5 per cent.
Dividend Income Investor.com
Join us as we uncover historically undervalued and overvalued dividend paying shares.CLICK HERE to find out more
Guide to Dividend Investing released
Aimed at UK and expat savers, investors and (future) retirees, the 90-page Guide to Dividend Investing is designed to help any investor to use dividend income to build wealth with less risk.
The Guide is written by Steven Dotsch, founder and managing editor of Dividend Income Investor.com.
The Guide substantially extends the information available on the Dividend Income Investor.com website on how to profit from investing in dividend paying companies which are historically undervalued. For a look inside Click Here.
For more information on the Guide to Dividend Investing, and, how to purchase the Guide.
Returns from savings and investments have been on the minds of many savers, investors and retirees in recent years, and, for good reason.
Austerity measures, inflation, higher taxes, lousy salary prospects, extended retirement dates, threats to elderly care provisions and depressed investment returns have increased the appeal of varied but regular and increasing income streams such as dividends can provide.
Tony Stenning, Head of fund manager Blackrock’s UK Retail Business worded it as follows “Today’s savers and investors face cash interest rates at record lows, diminishing fixed income yields demanding a higher risk appetite, and stubbornly high real inflation.”
Tony added “Dividend income investing represents a ‘best of both worlds’ option – one in which investors are able to preserve and grow their capital, while generating consistent, steady growing income.”
A dividend investing book for UK investors
While there are a number of books out there covering dividend income investing almost all are aimed at investors in US listed stocks and shares. In fact, we have not found one which is specifically aimed at UK investors.
With our new Guide to Dividend Investing we aim to spread the word about the benefits of dividend income investing for investors in London listed shares. Included are examples and case studies of some of UK’s most prolific dividend payers such as multinational retailer Tesco Plc, British American Tobacco Plc.
The Guide to Dividend Investing discloses the core of the investment methodology we use at Dividend Income Investor.com.
It teaches a value-based investment strategy with a twist - using a company’s dividend yield as the primary measure of value - in order to ascertain whether a company's share price is historically undervalued or overvalued, or, somewhre in between.
For a look inside the Guide to Dividend Investing Click Here.
The Guide details a straightforward system of investing in high quality blue-chip companies with reliable dividend histories and prospects. It discusses when to buy and sell these company’s shares when their dividend yields instruct you to do so.
The Guide to Dividend Investing demonstrates that by understanding the historical dividend-yield pattern of a company, an investor will be better informed as to when a company is, genuinely, historically undervalued, overvalued, or, is trading somewhere in-between.
For more information on the Guide to Dividend Investing, and, how to purchase the Guide, please Click Here.
Have a nice holiday break if you are heading out in the next few weeks.
Until next time.
Early Retirement Investor.com
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