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All New Biotech Specs: Part 5

Drug companies not only fight disease, they sometimes offer an attractive stock.

When it comes to multiple sclerosis, many companies have tried but failed to find a cure. But because MS is a lifelong condition, Cramer said Friday, the market for treatments is still "extremely profitable." There are 350,000 Americans living with MS and in 2009, MS drug sales reached $10 billion. Conservative estimates put it at $15 billion in the next 10 years.

The drugs that do exist to treat MS, whose symptoms come and go over time, seek to keep those symptoms at bay. There are four main players that offer such drugs, including Biogen Idec's Avonex, Bayer's Betaseron, Teva Pharmaceutical Industries' Copaxone and Serono's Rebif.

There is no pure play on MS treatments, but Biogen is close with its two drugs, which making up 71 percent of the company’s sales. It could soon face some major competition, though, as the Food & Drug Administration just approved Gilenya, an MS drug by Novartis. Biogen will likely lose share to Novartis because the newly approved drug has fewer and less-serious side effects than Biogen's does. Still, Novartis is a huge company and it's not clear Gilenya will boost earnings enough for Cramer to recommend the stock.

That’s why he prefers Teva, the largest generic drugmaker in the world. Its biggest drug is Copaxone, representing roughly 25 percent of the company's total profits. Copaxone is currently the number-one MS drug on earth, with $3 billion in annualized sales. The drug has patent protection through 2014. In January, Teva will lease a new version of the drug, which should help the company keep its competitive edge. Unlike Biogen, Cramer doesn't think Teva needs to worry about Gilenya. Copaxone has higher efficacy rates, meaning it works better and its side effects are less severe.

When Teva reports quarterly earnings in November, Cramer thinks it will reiterate its forecast for 14-percent earnings growth through 2014. The optimism is made possible by their healthy drug pipeline, far-reaching global supply chain and cost savings through the acquisition of Ratiopharm. Despite the growth rate, the stock sells at just 10 times forward earnings. Teva's stock is still $10 from its 52-week high, Cramer said, and has "terrific" risk reward.

"I want to stick with a safe, established player like Teva Pharmaceuticals,” Cramer said, “a company with a cheap stock that still has the top MS drug on the market."

When this story published, Cramer’s charitable owned Teva Pharmaceutical Industries.

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