Transparency/Disclaimer: I was compensated modestly by public relations to write this article. While I have vetted each company, researched it thoroughly and I've done my own due diligence, my due diligence is not a substitute for your own.
At present, AstraZeneca (AZN) is actively involved in a collaboration aimed at stopping drug-induced liver injury. The pharmaceutical company is working closely with Liverpool scientists to determine whether drugs are likely to have negative effects on the livers of the patients that use them. This is a problem that arises frequently and it is about time that someone tried to put a stop to it.
In western countries, this is the leading cause of liver failure and often results in the need to transplant the liver altogether. This is also one of the main reasons why drugs are denied in the first place. Any indication that a drug may cause liver injury almost automatically leads to rejection of the drug. If AstraZeneca successfully finds a way to stop these injuries from occurring, the company will be in a very good position indeed and will emerge as a clear leader in the market.
As things stand at the moment, there are ways of detecting drug induced liver injury, but these methods tend to only predict mild forms of the problem. Major, long-term liver injury is harder to predict and often the effects are only realized after the drug has been on the market for a while and affected a number of different people. Needless to say, this is an important aspect of AstraZeneca's development to keep your eye on if you are an investor in the pharmaceutical arena.
In other news, we are reminded about AstraZeneca's failed site in Loughborough - which was recently sold to a plastics company. When the pharmaceutical company closed the site down towards the end of last year, 1,200 jobs were lost in the process. When a company starts shutting down some of its sites, it always leads me to wonder what the real reasons behind the closures are and whether it demonstrates a sign of weakness.
A while ago, AstraZeneca was told to pay an anti-trust fine of about 52.5 million euros. The company has since asked for a reduction in the fine, but the general opinion on the matter is that it should not be granted one. This is mainly because the fine has already been cut once. If it is cut again, it may seem like unfair leniency towards the company.
The reason why the company has been told to pay the anti-trust fine is because it "misled patent officials and flouted anti-trust rules to block a generic version of its Prilosec heartburn medicine" a few years ago. As far as I am concerned, this is a serious offense and the company should not be allowed to get away with it lightly. This 'anti-trust' label could well extend to stockholders' viewpoint on the company and now that we have recently been reminded of the issue, the company's stock could suffer.
An overview of AstraZeneca at present shows us that there is mixed news. The fact that the company is planning to work toward decreasing the incidence of drug-related liver injuries is a very positive one indeed and could be a way for the company to make a significant name for itself. However, there are the other issues to consider as well, which, for me n any case, makes me feel less than certain about this particular pharmaceutical stock option.
AstraZeneca recently teamed up with GlaxoSmithKline (GSK) to begin addressing the problem of superbugs. This is a problem that has been growing in terms of its severity in recent years. Basically, what happens is that the bugs in question develop such a resistance to the antibiotics we use to treat them, that medication becomes ineffective. These superbugs can be picked up in the hospital, even if you are there for a completely different reason. A systematic approach is needed to address the problem, and both companies will make a big name for themselves if they are successful in this regard.
There are a number of reasons why AstraZeneca's competitor Eli Lilly (LLY) is a good option to keep in mind at present. The company recently announced that it, along with Boehringer Ingelheim Pharmaceuticals, recently developed a drug that has proven to be safe and effective for administration to African-American patients who suffer from Type 2 Diabetes. Apart from representing a significant step forward for the pharmaceutical company, this also provides African-Americans with an alternative treatment option. In the past, this ethnic group was underrepresented in most clinical trials for diabetes medication. Now though, Eli Lilly stands to be the name behind change and innovation, and that could take it a long way in becoming a solid competitor.
Johnson & Johnson (JNJ) was recently denied by an FDA panel of advisors to expand the use of its drug Xarelto. This is good news for pharmaceutical companies competing in the same arena. For example Pfizer (PFE) and Bristol-Meyers Squibb (BMY), which have been working together on a rival drug to Xarelto called Eliquis, will now be able to continue their work without having to worry about the competition. To me, it is notable that AstraZeneca is not even playing a small part in this battle. We need to see more new drugs from the pharmaceutical company.
Chromadex (CDXC.OB) supplies ingredients to the pharmaceutical industry. The company is also known for its dietary supplements such as BluScience, which recently rolled out on drug store shelves across the U.S. This new line of dietary supplements saw higher-than-expected sales in the first quarter of 2012. This stock is definitely one to consider putting in your portfolio.
Last but not least, Sanofi Aventis (SNY) has made the news lately with its promise for a potential cure for a certain type of liver cancer. The compound has not yet been fully tested, but clinical trials are set to begin in China next year. The drug will essentially starve liver cancer cells to death. This is a great step forward and if the company is successful, it will have a firm grip on the emerging market of China. This is a pharmaceutical company that certainly seems to have the right idea about how to move forward.
With competitors making big moves in putting new drugs into the market, AstraZeneca should be holding its breath that its new breakthrough will be a game changer. Anything less and the company may fall behind as it deals with litigation and other setbacks. If its new drug is successful, I think AstraZeneca will trade closer to $50.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.