This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Big Pharma Considers Kicking the OTC Habit

When they issue an annual report to stockholders or a quarterly report to Wall Street, Big Pharma companies place their prominent prescription products and the promising aspects of their pipelines front and center.

However, when investors and analysts read further down the list of accomplishments, they find that over-the-counter drugs, nutritional products and items ranging from mouthwash to sunscreen provide consistent, even if less spectacular, financial support.

For many big drugmakers, these lower-margin goods provide more than 10% of sales, but not every company is inclined to keep them around. Pfizer (PFE) exited this field 12 months ago, selling its business to Johnson & Johnson (JNJ) for $16.6 billion. Pfizer is using the money to focus on prescription drugs.

Bristol-Myers Squibb (BMY) is contemplating getting rid of all businesses unrelated to prescription drugs. It sold its over-the-counter operations and also plans to sell its medical-imaging business to a private equity firm for $525 million. Bristol said it was exploring options for its infants-and-children nutrition business and its wound-care unit.

Other drug giants such as Johnson & Johnson and GlaxoSmithKline (GSK) are bulking up on what the industry calls consumer health care products.

This component "is a knife that cuts both ways," says Damien Conover of the independent research firm Morningstar. On the plus side, a consumer-health care division doesn't have to contend with impending patent expirations "so you can smooth out cash flow," he says. However, such a unit "can distract from the strategy of focusing on branded drugs."

For the nine months ended Sept. 30, the biggest consumer-health unit belonged to J&J, with $10.7 billion in sales. Glaxo had $5.3 billion, Bayer produced $4.9 billion, Novartis (NVS) had $4 billion, and Abbott (ABT) had $3.2 billion.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,493.37 -69.93 -0.42%
S&P 500 1,925.15 -5.52 -0.29%
NASDAQ 4,352.6390 -17.1340 -0.39%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs