However, AstraZeneca has one of the best gross margins with 81%, similar to Pfizer Inc. (NYSE:PFE), while GlaxoSmithKline plc (ADR) (NYSE:GSK) and Merck have gross margins of 71% and 65%, respectively. The London-based pharmaceuticals company also holds the best operating margin with 33%, just edging out Pfizer at 32%. GlaxoSmithKline has 28%, while Merck lags further behind with just 21%. Interestingly, all the companies are doing exceptionally well compared to industry averages.
AstraZeneca is still the cheapest stock in terms of P/E ratio with just 11.59 times, well below the industry average of 14.20 times. The other company with P/E below the industry average is Pfizer with 13.60 times, while the rest are quite expensively priced (GlaxoSmithKline plc (ADR) (NYSE:GSK) at 19.07 times, and Merck & Co., Inc. (NYSE:MRK) 23.93 times).
The bottom line
In general, the Pharmaceuticals industry remains one of the riskiest in the market. The companies operating in this industry expose themselves to high risks with heavy investment in research and development, subject to results, which have to be approved by the Food and Drug Administration (FDA). Nonetheless, positive results often come with enormous upside for the companies.
AstraZeneca has probably done the right thing by acquiring a nearly-completed project, rather than developing its own from scratch. Omthera’s new cardiovascular drug is in its final stages, and the London-based pharma has efficiently hedged its way into the rapidly-growing biotech field. The company could have done much better by acquiring the veteran, Amarin, but nonetheless, Omthera was quite cheap and saved AstraZeneca some cash in achieving the same goal.
Additionally, AstraZeneca plc (ADR) (NYSE:AZN) is also in the running to be granted approval to develop and distribute Metreleptin for the treatment of lipodystrophy. The pharma giant is continuing its commitment to scientific innovation and global patient care for people impacted by diabetes and related metabolic disorders. The addition of fish oil products into its massive portfolio creates an opening to an interesting industry with a lot of potential. It’s no wonder why the company had to move fast with an eye on the positives.
On the other hand, Omthera Pharmaceuticals Inc (NASDAQ:OMTH) should brace itself for having ousted Amarin in securing a deal that ensures massive cash backing for future developments as it seeks to expand its fish oils line of products. This is the only way to keep up with the rapidly-developing market for the Omega 3 rich products. Meanwhile, Amarin will have to continue maintaining good performance, as it’s never known who could come knocking next.
The article AstraZeneca’s Acquisition of Omthera Pharma Is a Desperate Act originally appeared on Fool.com and is written by Nicholas Kitonyi.
Nicholas Kitonyi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Nicholas is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.