Comparative review

Early-stage drug companies heavily dependent on a single product area bring new meaning to the old saw about having all one’s eggs in one basket – in some cases the eggs are barely hatched. Companies like Cochlear and ResMed may have started out that way, but there are many, many others that have fallen by the wayside.

If you fancy a punt, then this type of stock might be for you, but make no mistake, a punt is what it is. For investment, we’d recommend sticking to companies with tried and tested products with established market positions – such as Cochlear or ResMed – if and, when of course, they’re available at a reasonable price.

Acrux’s number one product is Axiron, an underarm treatment for men with low testosterone. Axiron was launched in 2011 and by June 2012 it had apparently taken 13% of the global market. However, Androgel, launched by Abbott Laboratories in 2005 remains the dominant medication with a share of 63%. AVOID.

Pharmaxis is focused on therapies for 'undertreated respiratory diseases’. The company’s main product, Bronchitol, is an inhaler-delivered powder to help manage chronic obstructive lung diseases. It went on sale as a treatment for cystic fibrosis this year and is undergoing trials for other diseases. We wish the company luck, but would recommend leaving the stock for others. AVOID.

Phosgenics has a range of products that deliver drugs and cosmetic products through the skin. Elixia anti-aging products were launched in 2010, although revenues amounted to only about $3m in 2011. Products currently undergoing trials include those for the delivery of insulin to manage diabetes as well as various pain killers. AVOID.

Starpharma is targeting dendrimers – repetitively branched molecules which, if I’m reading Wikipedia right, can grab hold of drugs and deliver them to where they’re needed. The company’s lead product is VivaGel, which is under development for the treatment of bacterial vaginosis, which I’ll leave for you to look up. I can’t comment on the utility of the product, but we recommend you AVOID the shares.

Unilife is another company working on drug delivery. In this case it’s of the more traditional variety: syringes. They come with a few bells and whistles, though, such as pre-filled dosages, retractable needles and subcutaneous ‘bolus’ injectors. It sounds great and we hope it’s successful for someone, but we’re happy for it not to be us. AVOID.