Has GlaxoSmithKline plc (GSK) Become the Perfect Stock?

The big news for Glaxo this year is that it finally managed to buy out longtime target Human Genome Sciences. By raising its bid slightly, Glaxo was able to avoid a potential bidding war with Celgene Corporation (NASDAQ:CELG) and acquire the rights to promising lupus drug Benlysta, with which it had worked for years alongside Human Genome Sciences as a marketing partner. It also picked up some other promising drug candidates in late-stage trials as well.

But Benlysta could see further competition in the near future. Eli Lilly & Co. (NYSE:LLY) recently decided to drop development of its tabalumab drug for rheumatoid arthritis, but the company still hopes the drug can become a viable treatment for lupus.

That has Glaxo looking for new growth opportunities. Emerging markets are one prospect, and last month, Glaxo announced a joint venture with an Indian company specializing in vaccines to develop an all-purpose vaccine against polio and other deadly diseases like hepatitis B and whooping cough. In addition, its COPD treatment LAMA/LABA, which it licenses from Theravance Inc (NASDAQ:THRX) , could be a strong successor to Glaxo’s Advair, which has come off-patent and now has Teva Pharmaceutical Industries Ltd (NYSE:TEVA) looking to produce a generic version to compete.

With six drugs under review in 2013, including treatments for HIV, skin cancer, and type 2 diabetes, this year will be pivotal for Glaxo. If the pipeline can lead to more approvals, then Glaxo could finally break out of its long share-price slump and move higher.

For Glaxo to improve, it needs to get sales moving in the right direction and work on strengthening its balance sheet. If Europe turns around, then Glaxo will be in a strong position to take advantage and move close to perfection.

The article Has GlaxoSmithKline Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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