"With a sprawling portfolio of 409 different remedies, Teva Pharmaceuticals (TEVA) is easily the world's largest generic drug maker -- and unless people suddenly stop getting sick, Teva is one of the surest picks around for long-term investors," says Nathan Slaughter.The editor of Street Authority Market Advisor explains, "Teva is more than double the size of its closest rival in terms of both product breadth and market share.
"But even for a company of Teva's size, product No. 410 is a biggie. The firm recently introduced Venlafaxine, a generic version of Pfizer's anti-depressant Effexor.
"Effexor is currently raking in about $2.75 billion in annual sales domestically. As a lower-cost equivalent, Venlafaxine figures to take a bite out of that total.
"And because Teva was the first to file the appropriate paperwork challenging the patent, it has been granted 180 days of exclusive marketing -- six months to milk profits and boost margins before competitors are allowed in.
"But that's not all shareholders have to look forward to.
"Just a few days before Venlafaxine was green-lighted by the FDA, the company was given final approval to launch a generic version of AztraZeneca's Arimidex, a breast cancer treatment with annual sales of $917 million in the U.S.
"And there are still another 210 products in the development pipeline targeting brands with over $100 billion in annual sales.
"Meanwhile, management has just engineered the $5 billion acquisition of Ratiopharm, a major European powerhouse. Teva outbid Pfizer for the prize. But at just 2.25 times sales, the final price tag was inexpensive.
"The deal will give Teva dominant market share in ten European countries -- not to mention another $2 billion in annual sales. It will also generate hundreds of millions more in annual cost-savings synergies. And thanks to its immense scale and ownership of raw materials, Teva is already one of the leanest companies in the industry.
"So this isn't just another arrow in the firm's quiver. By joining forces with yet another top-five global player, Teva can more easily undercut the competition and continue consolidating market share in a global industry that will soon top $120 billion in annual sales.
"The big picture is crystal clear. An aging population will drive pharmaceutical demand nowhere but up, just as dozens of brands lose patent protection and become vulnerable to generic competition."
Steven Halpern's TheStockAdvisors.com offers a free daily review of the favorite stock ideas of the nation's top financial newsletter advisors.
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