Defensive Play: Global Health Care Stocks

  • Dec 12, 2019 AEDT
  • Team Kalkine
Defensive Play: Global Health Care Stocks

Health care is a huge part of the global economy and accounts for one of the fastest growing sectors. Traditionally, stocks under this sector fall under the defensive category.

Health care sector includes various businesses, which broadly fall in two major categories; health care equipment & services and pharma, biotech & life science. The health care equipment & services segment includes companies that are engaged in medical device development and other health care service providers like hospitals, clinics, physicians and health insurance service providers. The pharma, biotech & life science segment includes companies that are involved in the manufacturing of drugs. All the big pharma giants, as well as small emerging companies, fall in this category.

In this article, we are discussing few significant global health care stocks.

Pfizer Inc. - New York City headquartered health care company, Pfizer is an American multinational pharmaceutical corporation, which was founded in 1849 and is listed on NYSE with code PFE. Pfizer is organised into two business divisions- Innovative Health and Essential Health.

  • The Pfizer Innovative Health (PIH) comprises six business groups- Inflammation & Immunology, Internal Medicine, Oncology, Rare Disease, Vaccines, and Consumer Healthcare.
  • Pfizer Essential Health (PEH), which was earlier known as the Global Established Pharma business, is a leader in non-viral anti-infectives, biosimilars and sterile injectable medicines. PEH is focused on four core categories with different market dynamics- biosimilars, global brands in developed countries, sterile injectables and emerging markets.

The PFE stock closed at USD 38.22 on 11th December 2019, with a market capitalisation of approximately USD 211.5 billion.

Merck & Co., Inc. - A global health care company, Merck is engaged in delivering innovative health solutions through its prescription medicines, biologic therapies, vaccines, and animal health products.

The four main operational segments of the company are pharmaceutical, health care services, animal health and alliances segments. Merck’s pharmaceutical division comprises of vaccine products and other human health pharmaceuticals. The human health pharmaceutical products are the preventive and therapeutic agents for the treatment of various human disorders and sold under the prescription.

The company is listed on NYSE under the code MRK, and its stock closed at USD 88.98 on 11th December 2019, with a market capitalisation of approximately USD 226.5 billion.

Novartis AG – Basel, Switzerland based global health care company, Novartis is engaged in discovering and developing breakthrough treatments. It is a multinational group of companies specialising in the R&D, manufacturing and marketing of various health care products led by innovative pharmaceuticals, including eye care products and high-quality generic pharmaceuticals.

The company is listed on NASDAQ under the code NVS, and its stock closed at USD 93.04 on 11th December 2019, with a market capitalisation of approximately USD 210.7 billion.

Amgen Inc. - Amgen is working with the aim to develop treatments for high unmet medical needs and is continuously engaged in the development of the portfolio of biosimilar medications.

On 6 December 2019, the US FDA approved a new biosimilar medication of Amgen, named AVSOLA™ (infliximab-axxq). The approval for AVSOLA (as the reference product, Remicade® (infliximab)) was given for all the indications of chronic inflammatory conditions.

The company is listed on NASDAQ under the code AMGN, and its stock closed at USD 234.01 on 11th December 2019, with a market capitalisation of approximately USD 139 billion.

A Glimpse at Australian Health Care Sector

Australia plays a major role towards contributing in the global health care sector, and it is considered as one of the best in the world, offering safe and affordable health care to its people. Let us now zoom the lens on two ASX listed health care stocks that account for a major contribution in the Australian health care industry.

CSL Limited (ASX: CSL)

On 12 December 2019 (AEST 03:16 PM), the CSL stock was trading at $279.710, down by 0.865%. With a market cap of $128.06 billion, the stock has delivered a positive return of approximately 52.20% on a year to date basis. The P/E ratio of the stock stands at 46.710x with an annual dividend yield of 0.94%.

About the Company

CSL Limited (ASX: CSL) is into the R&D, manufacturing and marketing of pharmaceutical and diagnostic products, human plasma fractions and cell culture media for the treatment and prevention of serious human medical conditions. The company operates through three main businesses- Seqirus, CSL Plasma and CSL Behring. The major therapeutic areas and platforms of the company are as depicted in the figure below.

New Board Appointment

CSL Limited recently announced a new addition to its board, with Ms Carolyn Hewson AO joining as an independent Non-Executive Director. Ms Hewson has more than thirty-five years of experience in the finance sector, bringing extensive financial market, risk and investment management experience to the company’s Board.

In the past few years, the company launched various pharmaceutical products. In 2019, CSL rolled out influenza vaccines in Europe and Australia and two immunoglobulins in Japan.

Ramsay Health Care Limited (ASX: RHC)

The RHC stock was trading at $ 71.325 on 12 December 2019 (AEST 03:24 PM), up by 0.063%. With a market cap of $14.4 billion, the stock has delivered a positive return of approximately 28.41% on a year to date basis. The P/E ratio of the stock stands 26.910x with an annual dividend yield of 2.13%.

About the Company

Founded in Sydney, Ramsay Health Care Limited (ASX: RHC) is a global company, offering acute and primary health care services. The company was established in 1964 and serves from 480 facilities across eleven countries.

Ramsay Health Care, which has an employee count of over 77k people, caters to approximately 8.5 million patients in its facilities (hospitals and clinics) located in several countries including the United Kingdom, Sweden, Australia, France, Norway, Hong Kong and Malaysia.

AGM Presentation

Ramsay Health Care updated its annual general meeting (AGM) presentation on ASX, highlighting the overview, financial performance and outlook of the company.

Quick Highlights from AGM

  • The company generated $11.4 billion in revenue for the fiscal year 2019 (year ended 30 June 2019), which was up by 24.4% as compared to prior corresponding period (pcp).
  • Ramsay Health Care reported an EBITDA of approximately $1.6 billion, which was up by 14.1% on pcp.
  • The company’s core NPAT was reported at $590.9 million.

Outlook

  • The company expects stronger volume growth in the fiscal year 2020.
  • In the financial year 2020, Ramsay would continue to target core EPS growth on a like-for-like basis of 2-4 per cent, based on Core EBITDAR growth of 8-10 per cent.

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