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Healthcare

Healthcare. Nick Castaldi Chris Doyle Brian Lowell. Subsectors. Biotechnology

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Healthcare

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  1. Healthcare Nick Castaldi Chris Doyle Brian Lowell

  2. Subsectors • Biotechnology • The Biotechnology Industry in the Health Care Sector includes companies primarily engaged in the research, development, manufacturing and/or marketing of products based on genetic analysis and genetic engineering (including companies specializing in protein-based therapeutics to treat human diseases). • Healthcare Equipment & Supplies • The Health Care Equipment and Supplies Industry in the Health Care Sector includes manufacturers of health care equipment, devices, supplies, and medical products not classified elsewhere (including medical instruments, drug delivery systems, cardiovascular and orthopedic devices, diagnostic equipment, eye care products, hospital supplies, and safety needle and syringe devices). • Healthcare Providers & Services(ESRX) • The Health Care Provider and Services Industry in the Health Care Sector includes distributors and wholesalers of healthcare products not classified elsewhere, providers of Health Care Services, and owners and operators of Health Care Facilities and Managed Health Care. • Healthcare Technology (MDRX) • The Health Care Technology Industry in the Health Care Sector includes companies providing information technology services primarily to health care providers. Includes companies providing application, systems and/or data processing software, internet-based tools, and IT consulting services to doctors, hospitals or businesses operating primarily in the Health Care Sector. • Life Sciences Tools & Services • The Life Sciences Tools and Services Industry in the Health Care Sector includes companies involved in drug discovery, development, and production continuum by providing analytical tools, instruments, consumables and supplies, clinical trial services, and contract research services (including firms primarily servicing the pharmaceutical and biotechnology industries). • Pharmaceuticals(Teva) • The Pharmaceuticals Industry in the Health Care Sector includes companies engaged in the research, development, or production of pharmaceuticals (including veterinary drugs).

  3. Recommendation • Hold MDRX • Discuss TEVA • Buy ESRX

  4. Meaningful Use Act • Offers more than $30 billion in ARRA incentives over the next two years (by Sept. 30, 2012) • Health entities must show meaningful use of EHRs • Requires anyone covered by the HIPPA to adhere to new regulation by 2013 • EHR adoption is expected to grow from 12% to 90% by 2019 according to the CBO

  5. Why Healthcare IT • HIT Companies will benefit from ObamaCare • Health Centers are incentivized to improve IT systems and penalized if they don’t by 2015. • Increased demand • Steady growth over the next few years

  6. Allscripts Purchase Price: $ (3-1-11) Return: Market Value: $ (MDRX)

  7. What is Allscripts? Allscripts Healthcare Solutions, Inc. provides information technology, financial support, and connectivity to hospitals, physicians, and post-acute facilities. (EHR) • Headquarters are located in Chicago. • Founded in 1986

  8. Recent News Allscripts Healthcare and Blue Cross and Blue Shield of North Carolina. • announced new program to implement electronic health records (EHR) with more than 750 North Carolina physicians. Two Leading Health Systems in Michigan and California Select Allscripts to Connect and Coordinate Care in Their Communities. • provide their physicians and other caregivers with shared access to a single, unified patient record.

  9. Financials 52 Week Range: 13.85- $18.66 -23.13

  10. Advantages and Drawbacks • Economic slowdown • Not a necessity • Double-dip risk looming • Increased competition • Increased Healthcare IT Spending • Fulfilling implementation strategies. • Market leader • Constantly beating expectations

  11. Fulfilling Implementation

  12. Market Leader

  13. Data Flow Per Patient

  14. Earnings Overview • Steady Earnings Growth • Constantly beatings analyst consensus projections for earnings.

  15. Competitor Analysis

  16. DCF and Targets 12 Month Target: $21-$24.21-$27

  17. Teva Purchase Price: $48.84 (2-26-08) Return: ****% Market Value: $****** (**%) (TEVA)

  18. Introduction to TEVA • No. 1 generic pharmaceutical company • Top 15 global pharmaceutical company • Presence in 60 countries and sales in 120 countries • 40,000 employees

  19. Sales

  20. Financials 52 Week Range: 35.00-$39.03-57.08

  21. TEVA in the News • Recent acquisitions of Cephalon and Taiyo • Significant Reduced Loss of Brain Volume in Multiple Sclerosis Patients Treated with Copaxone® • Pfizer Inc. (PFE) Settles with  TEVA over Lipitor in UK; Deal Keeps Generic Lipitor at Bay to May 2012

  22. Advantages Drawbacks • After 2013, the market values of patent expirations vastly decline • Unknown growth opportunities in undeveloped emerging markets • Potential government regulation • Vertical Integration • Strong Acquisition History • Massive Economies of Scale • Over a quarter of a trillion dollars of U.S branded opportunity awaiting generics • Given the international focus on lowering medical costs, the demand for generics should continue to grow. • Strong growth potential in Europe and Asia

  23. Competitor Analysis

  24. DCF and Targets 12 Month Target: $42-$58.04-$67

  25. Express Scripts Price: (ESRX)

  26. What is Express Scripts? Express Scripts is one of the largest U.S. pharmacy benefits managers (PBMs). Its PBM services (97% of 2010 revenue) include retail network pharmacy management and home delivery services. Clients include health insurers, third-party administrators, employers, union-sponsored benefit plans, government health programs, office-based oncologists, renal dialysis clinics, ambulatory surgery centers, primary care physicians and others.

  27. Why Express scripts? • Industry leader • Strong financials • Solid business foundation • Successful strategic acquisitions • Attractive near and long term growth prospect • Effective management

  28. Financials 52 Week Range: 34.47-$40.42-60.89

  29. Acquisitions

  30. Intent-behavior

  31. Risks? • Retailer fall-out (Walgreens) • Stiff competition • Room to grow organically? • Slowdown of domestic growth

  32. Competitor Analysis

  33. DCF and Targets 12 Month Target: $42-$57.40-$66

  34. Q&A Option 1 : Hold MDRX, Hold TEVA (Increase Weight) Option 2 : Hold MDRX, Sell TEVA, Buy ESRX Option 3 : Hold MDRX, Hold TEVA, Buy ESRX

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