Novo-Nordisk (NVO)

This is very involved in treatment for diabetes. Has stayed away because of the pricing of insulin. Insulin prices have increased almost every year sequentially for the last 20 years, which is incredibly difficult to understand, given the strides that have been made in increasing yields in the biotech fermentation process to produce the drug. Every time new entrants come into the industry, they seem to take the same pricing increase every year. In Europe, insulin is sold at a fraction of the price it is sold in the US. The US president could sign an Executive Order at any time, allowing imports of drugs from the European market, which would collapse the profitability of the industry. He doesn't understand the pricing dynamics.

Just came out with 3 new products. We'll probably see oral insulin medication weekly very shortly. They've passed all FDA approvals for cardiovascular problems. Their weight loss product is about 20%, better than Eli Lilly's. This is not just a matter of penetrating US markets as they are starting to sell more and more internationally to the Indian and Chinese markets. There should be room for dividend increase, probably in the 10% range this year.

A Danish company with about $50 billion in market cap. A global leader in diabetes management. As the world got richer, we all got fatter. They recently announced a $5 billion share buyback. They do this in four-month chunks and are in the middle of the 1st splice. They did this last year as well. They are in a growth market. The stock has had a pretty big run. Look at this in the 1st quarter to see if it pulls back, and if it does add it to your portfolio.

(A Top Pick Jan 27/17. Up 37%.) It helps diabetes and is the #1 diabetes company globally. They’ve added an $800 million buyback, which will be completed by the end of October. They’ve also had a number of interesting announcements on the pipeline side. Good strong balance sheet.

Has 4 new products coming out that are all potentially blockbusters, especially the semaglutide, because it means glucose control, weight loss for the diabetics. Recommends half positions for the Top Picks, which is what he does for new clients. Dividend yield of 1.9%. (Analysts’ price target is $50.20.)

Trading substantially higher prior to the Trump bump, which effectively was very negative to healthcare. Fundamentally, its pipeline is quite good, with a number of announcements coming through. They are doing a $2 billion Cdn share buyback. The dividend is sustainable, and the balance sheet is very strong. You could add to your holdings.

(Market Call Minute) We are a seeing a turnaround.

One of the leaders in diabetic drugs. A very consistent ROE. One of the rare high ROE companies that have a healthy dividend, just north of 3%. One problem he has with companies that produce pharmaceuticals, is that they almost always have to be having blockbuster drugs. This is probably a reasonable time to buy this.

(A Top Pick June 7/16. Down 25.31%.) A perfect example for these 3 past Top Picks to be able to take advantage in the fall, for buying more of them to dollar cost average. Year-to-date this is up 10%, because sales to the US pretty much got chopped in half, and that is really on the pricing of insulin. They have 3 new products where they have already got FDA approval and are waiting for 2 more to come out. They are now starting to sell better into China and Japan, getting them away from the US market.

(A Top Pick Jan 27/17. Up 17%.) The number 1 diabetes drug globally. A good pipeline. More cash than debt. It is also buying back stock. Just reported very good numbers this week.

This is a Hold, because we have to wait until the company turns around at some quarter from now. Their big problem is between future volume growth, offset by the lower pricing of drugs in the US. Future volume growth would be as more Type 2 diabetics are expected to increase 50% over the next 20 years. The pricing came off a lot faster than their growth in revenues, so the stock price has been pummelled. At this level, valuation is okay. Outside of the 3 blockbuster drugs they have, they are starting to move toward some R&D for renal and kidney disease.

The market leader in insulin for Type1 and Type2 diabetes. It has had a huge correction like a lot of the drug stocks, on the back of the Trump regime. The stock is down about 30%. Thinks the rate of growth is going to be less than it was in the past, but longer-term this is a good story. It also has a hemophilia drug. Dividend yield of 2.53%. (Analysts’ price target is $35.10.)

Has a very small position, and it ranks high on his list. It has done very well in diabetes insulin. However, that is a part of the market where there is starting to be some downward price pressure as more competition has come in. There hasn’t been enough R&D to find out where the next leg of growth is going to be. You would think emerging markets would be a dominant area for them, but they don’t seem to be moving in that direction. The stock is not cheap and gives you about a 2.5% yield. He would like to see an activist investor get involved.

A Danish company involved with diabetic drugs for the most part. Demographically demand for their product should increase. They’ve had a tremendous run over the past 10 years. The stock recently sold off hard, and he is starting to look at it again. If you have a long-term time horizon, this would be a good entry point.

A very interesting Danish company. They have about 50% of the volume market share in insulin. The diabetes market is about $45 billion, and they basically have 28% market share. On top of that, they have done a very good job of making it easier to use their products. Trading at 16X earnings, and used to trade at 30X. The stock has fallen a lot, and diabetes is a growing problem, particularly in North America. Dividend yield of about 2.5%.