Abbott Laboratories (ABT), Celgene Corporation (CELG) & Three Pharma Companies to Buy in 2013

Fighting generic competition

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has faced a major setback from generic drug maker Actavis Inc (NYSE:ACT), which has won U.S. court approval for its Pulmicort generics. Pulmicort was AstraZeneca’s product, and one of the best branded drugs, contributing $1 billion in sales until 2008, when Teva launched the generic version of Pulmicort. Generic Pulmicort is one of the largest generic medicines of the company, which contributed $525 million in sales in 2012.

Presently, Teva is the only generic drug maker for Pulmicort in the market, but with the launch of Actavis’ generic, Teva will face new competition in 2013. Actavis plans to launch its generic version by the second quarter of 2013. With new generic competition, analysts see a decline in Teva’s generic gross margin in the second quarter.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA)’s patent for its branded drug Nuvigil, which treats sleep disorders, will expire in December 2023. The company has already settled claims with Mylan, and according to the settlement, Mylan will be able to sell its generic version of Nuvigil until June 2016. The U.S. court has ruled one positive decision in favor of Teva, so that it will enjoy Nuvigil sales without facing any generic competition, other than Mylan’s generic version, until 2023.

Hence, patent protection will provide it a long-term opportunity to grow for almost the next ten years. Nuvigil sales in the first quarter were reported at $83 million, and its long-term patent protection will help the company attain long-term gains, which will counter against the losses incurred by Actavis Inc (NYSE:ACT)’ Pulmicort generic.

Now is the time to buy

Abbott Laboratories (NYSE:ABT)’s nutrition and diagnostic segments, supported by emerging market growth, have performed very well and are expected to enhance its earnings in the long-term.

Celgene Corporation (NASDAQ:CELG)’s earnings are expected to get boost with its new drug Pomalyst, which has outperformed consensus estimates of $8 million, indicating positive outlook for 2013. It is expected to be a blockbuster drug for the company.

For Teva, with Nuvigil’s patent protection, I can see long-term gains; its growing sales are expected to offset losses incurred by Pulmicort generics.

I am optimistic on these pharmaceutical companies and recommend buying these stocks.

The article 3 Pharma Companies to Buy in 2013 originally appeared on Fool.com and is written by Shweta Dubey.

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