Another quarter is in the books, but reading up on Income Investor recommendation GlaxoSmithKline
Results were solidly positive once again. Revenue rose about 10%, margins expanded (the company now has better than an 80% gross margin), and operating profits were up 15% for the quarter. Not bad at all in an environment where others like Pfizer
I'm also still positive on this company's pipeline. Merck will get the jump on the cervical-cancer vaccine market with its product, but I believe there will be plenty of room for Glaxo's entrant as well. Looking a little further ahead, Tykerb could be a real boon in the breast cancer market, since a recent trial of this oral medication (given along with Roche's Xeloda) was stopped early because of very strong efficacy.
And of course that's not all there is to the story. There are other drugs in the pipeline, like Trexima (for migraines) and a potential vaccine for bird flu. And don't overlook that vaccine business -- 44% growth in this quarter may just be a harbinger.
In my mind, that more than helps to mitigate the risks that come with these stocks. There's ever-present lawsuit risk nowadays, plus the old standby risks of trial failure and price pressure from governments and managed health organizations.
Glaxo is certainly no longer as cheap as it was, nor is it still cheap enough for me to really strongly advocate new purchases. I think there's still money to be made here, and I think investors with long-term orientations should sit tight, but newcomers might want to cast the net a little wider in their search for pharma value.
For more related Foolishness:
Merck is a Motley Fool Income Investor recommendation. Pfizer is a Motley Fool Inside Value recommendation. Check out our entire suite of newsletters by clickinghere.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
