The case for Dutch group Crucell
But a more interesting, purer play on vaccines is Dutch biopharma group Crucell (Amsterdam: CRXL), says Dr Mike Tubbs in his Research Investments newsletter. It's the largest independent vaccines company in the world, and within the global top six for vaccine sales. The group has several vaccines already on the market, which it sells around the world, and there are many more in its pipeline. These include a yellow fever vaccine in very late stage development, plus vaccines for rabies and TB in phase II development. In early stage development are vaccines for malaria, ebola, HIV and hepatitis C. All are being produced with partners.
The company also licenses out its own technology, which "is rapidly becoming an industry standard for the development and manufacture of vaccines, therapeutic proteins and gene therapy products". It has 14 licensees for vaccines, 30 for therapeutic proteins and eight for gene therapy, with a list of users that includes GSK, Novartis, Merck and Sanofi.
But most exciting of all, Crucell is developing a universal flu vaccine, which will be able to target any type of flu strain, from ordinary seasonal flu to the dreaded swine and bird flu variants. Partly on the basis of this product, consumer healthcare giant Johnson & Johnson has invested more than 300 million euros to take an 18% stake in the firm.
The financials look solid. The group first moved into the black in 2008, with an operating profit of 7.9 million euros, since when earnings have grown rapidly. For its full-year 2009, operating profit came in at 39 million euros, a record result. And the company is sitting on an extremely healthy-looking cash pile of 428 million euros up from 173 million euros at the end of 2008.
That's enabled it to increase its spending on research and development by a third, at a time when most pharmaceutical companies are looking to cut back. Better yet, the company is a decent play even if you are concerned as we are about the prospects for a double-dip recession. As Tubbs points out, "vaccines are needed irrespective of what the economy does. That makes Crucell a great recession-resistant holding." He reckons you should buy the stock at any price up to 18 euros.