Show BUSINESS t t thi 1 I ItI VIE VING TilE DRUG Over the past year or so the stock market as measured by bythe bythe bythe the Dow Jones Industrial Avera Average e has risen over points reflecting steadily improving economic conditions conditions' and higher corporate profits For the most part however the leading drug stocks have failed Called to participate in the advance Actually the majority of them are priced at or below the levels at which they sold a year ago Many problems There are many reasons why drug company stocks have been among the poorer stock market performers for some time Probably the foremost reason however is the adverse publicity that a large number of oC drug firms have received over the past several months Fort Fori example Abbott Laboratories American Home Products Johnson Johnson Merck Pfizer zer Richardson-Merrell Richardson Searle Sterling Drug and Warner-Lambert Warner have all admitted to making overseas payments in recent years-some years up to several million dollars In addition to the foregoing Searle was was recently charged with sloppiness and questionable questionable ques- ques practices in regard regard to to safety-related safety drug research it submitted to the FDA American Home Products was cited by the FDA as having sent out a misleading letter to todo do doctors tors regarding the use of its product which has been under- under attack several drug companies are producers of DES a product that the FDA is considering banning as asfar as far as its use in animal feed is concerned other dr drug g producers are involved with sequential birth control pills which may be banned for safety reasons the FDA is in investigation investigation investigation in- in intravenous solutions used in a Chicago hospital and nd the agency is preparing a proposal to ban use of chloroform in toothpastes mouthwashes mouthwashes and non non-aj non nonI I v prescription ll cough arid and rid cold cold ld remedies Add to these pro problems lems the fact that the earnings of many drug com corn panics have been slowing appreciably appreciably appreciably ap ap- ap- ap and you have an industry that is at least t temporarily temporarily tem tem- m- m in the investment doghouse Hold IbId good drug stocks Even though the drug industry industry industry in in- is at the moment having an problems this appears to be already reflected in in- inthe the prices of most drug equities Furthermore worldwide sales of the US U.S. pharmaceutical industry in 1975 when final tally is made should show an increase of about 14 percent over similar 1974 figures 12 billion versus billion b business siness abroad outpaced that in the US U.S. market a trend that thatis is expected to continue For IFor over two decades the drug industry has been consistently consistently consistently con con- among the top three or four manufacturing industries in terms of profitability Typically it earned about 12 p percent on sales each year and about 18 is' is isto to 19 percent on sto stockholders equity Also most companies in the group pay payout out only modest amounts in dividends so that a relatively substantial share of profits is retained for reinvestment in the business This has resulted in good growth over the years FOR on TilE THE MOST l part future gains are arc likely to come from Crom newer products further overseas expansion aging populations that require increased increased increased in in- creased medical care and additional extension into the animal health medical devices and diagnostic products areas Therefore the term longer-term prospects for the pharmaceutical pharmaceutical pharmaceutical phar phar- group a as a whole appear to be optimistic In the past the Research Department of Dabson's Babson's Reports has recommended purchase of numerous drug issues At Al the present time retention of the stocks of the foremost firms is advised Those seeking to gain gam representation representation rep rep- in the field might con consider conder lder buying the con con- grade e grade common stock i of Squibb Corporation which appears attractively priced for Cor growth Anyone who ho is interested in interested in- in tl-d tl in receiving a free t report on this company may J y write to na ons on's Reports Inc Wellesley lulls Hills Mas Massachusetts l |