Play the generic pharmaceutical market! President Obama recently passed healthcare reform in the United States. This requires everyone to get health insurance. One of the things the bill does to save money is to allow subsidies on drugs and medicines. An additional money saver is to allow subsidies on generic medication.
Lannett CO (LCI) is one of the few generic medication manufactures in the United States. They just recently got approved for their generic medication of Zofran, an injectable GlaxoSmithKline drug used to minimize nausua. Zofran sold about $58 million last year. Last year they mate their first profit after two years of disappointing earnings and getting FDA warnings for their generic drugs. Do you think out of that $58 million people will by willing to switch to a generic version that costs at least 20% less? You betcha! It’s pretty easy to see that their stock can easily double if they took 10% of that Zofran market share.
Other fundamental things that look good – cash is decent and debt is at a reasonable level. Technicals show a bottoming at $4.40 and there’s strong support going back 10 years. Their net income has increased for in a qtr-to-qtr basic for the past year. It also has doubled from the past quarter. With the low stock price and continuing drugs to come aboard the generic medication line, this might be a great time to get in.