London-based Jamie Clark guides Bank of America Merrill Lynch to an impressive debut in second place. His squad reports on eight companies and is generally upbeat on the region’s health care and pharmaceuticals group, which climbed 17.8 percent over the 12 months through May, pacing the broader market by 9.1 percentage points. “We view the fundamentals as positive, offering robust defensive long-term growth,” says Clark. “Emerging-markets health care spend tends to grow at least in line with gross domestic product growth, and we believe growing health care spending will be a long-term trend.” One of the BofA Merrill analysts’ favored players is Aspen Pharmacare Holdings, which supplies branded and generic drugs, as well as consumer and nutritional products. Last June, citing management’s intentions to purchase a Pfizer infant nutrition brand from Switzerland’s Nestlé and its proposed acquisition of a Merck & Co. active-pharmaceutical-ingredient manufacturing business, they upgraded Aspen from neutral to buy. Benefits of the transactions were not reflected in the stock price, they believed. “As well as being financially accretive,” explains Clark, “the deals diversified the business both geographically and into products with low competition and high barriers to entry.” By the end of May, shares of South Africa’s largest drugmaker had soared 45.2 percent, to 27.32 rand, besting even the nifty 30.6 percent gain for the sector. Looking ahead, his group foresees “few risks on the horizon that could materially damage health care demand,” he adds. “From a stock point of view, there are fewer catalysts than there have been in previous years — hence we expect stock performance to be more muted. To a large extent the biggest driver of share prices is likely to be investors’ views on macro and whether to position themselves in defensive sectors, like health care, or more cyclical sectors.” |
The 2014 Emerging EMEA Research Team: Health Care & Pharmaceuticals, No. 2: Jamie Clark & team