Show BUSINESS and the STOCK MARKET by bv BABSON'S REPORTS c iris PROSPECTS GOOD FOR DRUG COMPANIES COMPANI ES ESBy By the end of this year the Food and Drug Administration under its Us new new leadership intends finally to complete its review of the effectiveness of several several sev sev- eral thousand drugs So far it has acted acted act act- ed on only about 15 per cent to 20 per percent percent percent cent of the approximately 4 drug products products pro pro- ducts subject to the study which was authorized by Congress in 1962 What hat drugs will eventually be affected affect affect- ed is of course anyone's guess Indications Indications Indications Indi Indi- are however that the industry will be faced with a tremendous job of and restricting promotional promotion promotion- al claims for hundreds of products considered considered con con- to be ineffective A few products products pro pro- ducts will probably be banned tanned a step which has already been taken in the theL L 10 case of oC c certain antibiotic combinations found wanting Sales And Earnings Trend Upward The result of the aforementioned review review re reo view of the efficacy of drugs is likely to be the major negative element clement inthe inthe in inthe the total drug picture this year The industry however has been the subject subject sub sub- of government pressures for a long longtime longtime longtime time and still has succeeded in wrapping wrapping wrapping wrap wrap- ping up good gains every year We have no reason to suspect that there will be bea a sharp slowdown in 1970 The Research Department of Babson's Baboons Reports looks for sales and earnings of oC most of the leading drug companies to record some further progress in 1970 just as they have for many years However however How how- ever the strong growth rate of oC the past may be tempered somewhat due to the slower pace of the economy As far as the longer term is concerned growth prospects are generally optimistic Favorable Factors This year jear as well as In the future most of the outstanding drug companies compan compan- ies les should benefit increasingly from their previous diversification efforts The foremost foremost fore fore- most pharmaceutical producers now have broad product lines encompassing cosmetics chemicals hospital equipment equipment equip equip- ment and supplies both ethical and proprietary proprietary proprietary pro pro- drugs veterinary items electronic electronic elec elec- medical instruments pollution control control con con- products etc Because of this wide ide diversification they are not so adversely affected by hy a slowdown in one parti particular particular u. u lar segment Overseas expansion and increased foreign foreign for for- eign demand should be big factors in il bringing about shout further gains for the domestic domestic do do- domestic drug companies Most of the firms are represented In and are achievIng achieving achieving ing substantial benefits from the leading leading lead lead- ing foreign markets Other Pluses Plus A possible up step-up in the introduction of new products may occur this year ear and over the near term The new FDA Commissioner has expressed hope that the agency will be able to speed processing processing pro pro- pf new drug applications Furthermore Furthermore Fur Fur- research in the industry is beginning to shift to more basic activity in heart disease and other areas which could result in some important breakthroughs break Expansion of hospitals nursing homes and extended care facilities as well veil asmore as asmore asmore more inclusive government medical programs programs programs pro pro- grams should all increase demand for products of the drug companies Other plus elements include the elimination of surtax benefits from measures designed designed de de- signed to reduce costs and further increases in increases in in- creases in sales of many promising newer newer new new- er r products that have been introduced in recent years eais ealS by several of the most important firms in the field Some Attractive Buy Buys The stock market decline this year ear has opened up some good buying opportunities opportunities opportunities op op- among the drug issues Currently Cur Cur- renty the Research Department of Babson's Bab sons son's Reports favors such conservative grade stocks as American Home Products Products Products Pro Pro- ducts Bristol Bristol MI ers Mer Merck k and Sterling Sterling Ster Ster- ling Drug Another attractive purchase |