Vaccine royalties boost CSL
SHARES in global vaccine maker CSL reached a record high on Tuesday after the company upgraded its profit forecast to 20 per cent, helped by a rise in Gardasil royalties.
SHARES in global vaccine maker CSL reached a record high on Tuesday after the company upgraded its profit forecast to 20 per cent, helped by a rise in Gardasil royalties.The Melbourne-based company, which makes the cervical cancer vaccine as well as other life-saving blood treatments, had originally anticipated profit to grow by just 12 per cent.Its shares jumped almost $3 on the news, to a record $50.17.The company reported a net profit of $US1 billion last financial year. Its new outlook has been adjusted to remove the impact of exchange rate movements, after it started reporting in US dollars this year.Chief executive Brian McNamee said the increased outlook was underpinned by the performance of CSL Behring, its large-scale plasma branch. "A number of factors have contributed including a higher level of sales, a better sales mix and improved efficiencies across the supply chain," he said."Also contributing to the better outlook is higher than anticipated royalty income from sales of Gardasil."In 2007, the Australian government introduced Gardasil as part of a mass vaccination program against the human papilloma virus, which was offered to women and girls aged up to 26.CSL also manufactures vaccines for influenza, tetanus, measles, mumps and hepatitis A and B.Macquarie Group analyst Craig Collie said the positive outlook suggested the company was benefiting from its current position in the healthcare market."It's clearly a strong upgrade and confirms just how positive market conditions are right now and how strong their competitive position is right now."Last month, CSL announced it would buy back another $900 million worth of shares, or 4 per cent of issued capital, over the next 12 months.UBS analyst Andrew Goodsall said the higher-than-expected outlook showed CSL was benefiting from its competitor, Baxter, undergoing a plant refurbishment that had cut its production by about 20 per cent."There has been robust demand as well," he said. "We think there is still growth in healthcare, but there are obviously things going on that are peculiar to this [plasma] industry."Dr McNamee, who is credited for building the company up from a local government enterprise to a global business, will end his 23-year tenure as chief executive in the middle of the year. In 2000, he led the takeover of Swiss counterpart ZLB Bioplasma when he was fighting testicular cancer. Four years later the company acquired a second big target, US-based Aventis Behring.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free