This Day On The Street
Continue to site right-arrow
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!

China Drug Stocks Offer Value Remedy

Stocks in this article: CHME.OB LTUS.OB CYXN.OB

Chinese pharmaceutical stocks are offering great bargains for value investors.

Pharmaceutical sales in China have been growing at an average annual rate of 15.5% since 2005. This growth is being fueled by rising incomes, a growing middle class and a rapidly aging population. The elderly population in China has grown from 171 million from 130 million over the past decade, and health care spending by the elderly is five times higher than it was in 2000.

In addition, Beijing has made health care one of its primary initiatives and plans to spend $123 billion on a universal health care in the next three years.

China's pharmaceutical industry is rapidly consolidating, and the market leaders are growing in value.

These leaders have several things in common: a strong nationwide sales and distribution network, strong research and development capabilities and access to capital.

Although some Chinese pharmaceutical companies trade with price-to-earnings ratios as high as 63, Lotus Pharmaceuticals (LTUS.OB) has a P/E of only 5.12.

You would expect a low P/E to be indicative of a stalwart company. However, Lotus Pharmaceuticals grew revenue at 59% from 2005 to 2008, and net income is up 700% since 2005.

The company's revenue comees from a combination of pharmaceuticals wholesaling and the development and sale of proprietary drugs. It plans to continue to grow by expanding distribution channels, expanding production capacity through the building of a large factory and bringing new drugs to the market by partnering with top research institutions.

We believe a company this cheap should not be overlooked. In summary, Lotus is a comprehensive company with both strong manufacturing capability and a nationwide distribution network, great research-and-development capabilities with a new drug pipeline and a very attractive valuation.

1 of 2

Select the service that is right for you!

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 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • 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