You’ve probably noticed one of the many scenic TV commercials that advertise prescription drugs. But did you notice that they’re no longer just promoting allergy medications.
Bristol Myers Squibb (BMY) is trying to sell you an anti-psychotic called Abilify, by showing you two friends who meet by the side of a country road on a lovely autumn day. Abilify is BMY’s blockbuster treatment for schizophrenia and bipolar disorder.
And it’s working. These pretty ads have translated into even prettier profits. Global sales of Bristol’s drug Abilify surged 34% to $420 million last quarter, while AstraZeneca's (AZN) Seroquel racked up $1 billion over the same period. That increase stems, in part, from patients asking their doctors about drugs they’ve “seen on TV”
But Big Pharma is also starting to feel some serious side effects from its popular ads. Certain drugs including Seroquel have been linked to high blood pressure, high cholesterol, and even diabetes.
In October, Lilly (LLY) finally added a strong warning to the label on its drug Zyprexa after spending more $1 billion settling lawsuits over these charges.
Nonetheless you’ll likely see one of Big Pharma's picture-perfect ads for a long time to come.
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How do you trade?
I recommend generic drug makers such as Teva (TEVA) says Pete Najarian, because patents are expiring. Also check out Novartis (NVS) he says.
You might want to keep an eye on Organon Pharmaceuticals which was recently bought by Schering Plough (SGP) says Guy Adami. (In the interest of full disclosure Adami’s wife works for Organon.)
I like WellPoint (WLP) Jon Najarian says.
