TFN eNews 10/23/2009: This is great news for investors!
Published via e-mail broadcast on October 23, 2009
In today’s TFN eNews:
* Enemies of America
* Expanded powers
* The right stuff
Dear TFN eNews reader,
According to Democratic Congressman Alan Grayson (D-Fla.), Republicans are the “the enemy of America.”
(How times have changed: To think, just a year ago, liberals still considered dissent “patriotic”.)
But apparently, in a Congress operating under this new monopolist definition of “bi-partisanship”, there are a few oases of agreement.
Even the Enemies of America apparently support safe food and drug supply, for example.
New legislation granting the Food and Drug Administration (FDA) sweeping new powers to oversee the nation’s food supply is being fast-tracked. There’s not just agreement among Democrats and Enemies. But even between consumer groups and an industry stung by product recalls.
This new legislation would require the FDA to step up inspections of food facilities and to issue new rules to improve the quality of imported food. The FDA would have to set safety standards for produce and issue rules to ensure that imported food meets the same standards as those for domestically produced food. The bill’s sponsors hope to pass it before the year is over.
This is all quite laudable. After all, even I prefer my arugula free of e. coli. And my aspirin free of lead powder.
In fact, this is great news for investors!
*** Because this represents the next logical step in a large process that began on June 18, when the U.S. Pharmacopeial (USP) Convention reached three new cooperative agreements with Chinese drug control authorities.
You’ve probably never heard of the USP. It’s a scientific organization that sets standards for the quality of prescription and over-the-counter drugs. These standards are enforced by the FDA.
U.S. companies are all for it . They want to avoid costly recalls: The recent salmonella outbreak alone cost the peanut industry more than $1 billion. Not to speak of billions in possible litigation awards!
But there’s another reason for their enthusiasm: Lack of reliable quality standards is the single major hurdle that’s kept the U.S. pharma industry from moving abroad!
And it’s been killing them! Especially U.S. pharma companies: Over the next few months, U.S. pharma’s facing rapidly declining returns on investment as thousands of blockbuster drugs lose patent protection. Since 2007, the industry has laid off thousands of workers to cut costs. There’s only one way out of this looming debacle: Follow the toy, textile, electronics, shoe, furniture, solar, and computer industry.
And move to China!
Congress is now speeding up that process. Because this legislation will give the FDA more authority to enforce strong quality standards. Companies will have to verify that foreign supplies are safe. Most importantly, there’ll be a bigger FDA presence abroad for more on-site inspections in more countries.
Especially China!
This is just what the pharma industry has been waiting for. After all, 75-80% of all ingredients used by U.S. drug manufacturers are imported, mainly from India and China. So are 40% of finished dosage forms.
But the FDA was unable to provide inspection records for a full two-thirds of the 3,250 facilities currently supplying the U.S. with pharmaceutical ingredients.
In a global economy, countries compete for manufacturing business via their labor cost and their currency. The country with the cheapest labor and pricing output at the most advantageous exchange rate, tends to get the order.
But cheap labor is only good if it produces equal quality. It’s to that quality differential that we owe the remaining American automotive and industrial manufacturing jobs. This new wave of drug legislation will make sure that the risk of supply chain contamination is drastically reduced.
The Chinese love it! They’ve already committed $1.7 billion to improve the quality of the food and drugs manufactured for export.
Now the Americans will not only show them how to apply quality controls. They’ll do the work for them… at U.S. taxpayer expense!
Back this summer, I had recommended four Chinese drug makers I thought would be the prime beneficiary of this trend.
We took 51% gains on one of them, Tianyin Pharmaceutical Inc. — and are still coddling half of that position in hopes of further gains.
The three other recommendations in this medium- to long-term play haven’t rewarded our foresight quite so quickly. Right now, they still can be had at 30-40% discounts over their price level last summer. But they’ve started to move.
One of them may be close to a turnaround. Recent financial highlights feature record revenues and increases in both gross margin and net profit. In fact, the company posted its first overall net profitable quarter since the Q2 2008. (’bout time!)
Revenues increased to US $1,293,764 for the three months ended August 31, 2009, from US $931,203 in the corresponding period in 2008. This is an increase of 39%.
Gross profit increased 57% to US $962,923, reflecting a 74% gross margin for the three months ended August 31, 2009.
An overall net profit overall of US $237,167 for the three months ended August 31, 2009, marks the first time that Sinobiopharma has moved to net profitability in more than a year.
We remain strongly bullish on the entire Chinese drug sector!
(Click here if you’re interested in this: http://www.todaysfinancialnews.com/HSC/PROXY/WHSCK801.html)
*** TFN’s stock guru Andrew Snyder writes today: “It’s is a tough market when consumers aren’t willing to spend. But Rocky Brands (NASDAQ:RCKY) proves it has the right stuff when times get tough and strong action is needed. To survive in an economy where spenders are as uptight as Oprah at a Weight Watchers’ convention, a company needs two things: strong fiscal management and one heck of a brand name.
“RCKY is proving to its shareholders that it has both. Shares of the boot maker are up by nearly 20% today on news that the company just put a strong third quarter into the history books. Even though sales were down nearly $6 million compared to last year at this time, the company managed to record a bottom line significantly higher than a year ago.
“During Q3 2009, Rocky sold $66.6 million worth of its popular footwear, versus $72.5 million in the year-ago period. It translated those sales into $4.4 million in profits, more than 50% higher than last year’s $2.9 million.
“The positive results come thanks to strong brand loyalty and tight fiscal management. With a nasty consumer-based recession forcing shoppers to cut their spending, Rocky was charged with concentrating on its key products and stretching every dollar of cash flow to its max…”
Read on right here: http://www.todaysfinancialnews.com/us-stocks-and-markets/rocky-brands-if-the-boot-fits-wear-it-10226.html
*** 3 tiny stocks you need to own now!
This upstart financial information network has generated 63 double-digit gainers so far in 2009! Find out what “ridiculous” method they found to reliably pick winning stocks. You need to read this! http://www.todaysfinancialnews.com/HSC/ridic/WHSCK901.html
*** Quote of the Day:
“The American Constitution is the Anchor of Western Civilization. We know that no matter how spineless our politicians are here in Europe — and they barely have a vertebra between them — that as America’s First Amendment remains inviolate, there will always be an oasis of freedom on this planet. But as soon as anyone is allowed to interfere with it, to water it down, to reinterpret it, to chip and chisel away at the First Amendment for reasons of religious and cultural sensitivity, then we can wave civilization goodbye! ”
– Pat Condell, Dumpert.nl
Recommended Reading:
Freedom Group: Right-wing gun nuts get ready
Q4 Update: TFN Complete Guide to Stem Cell Stocks under $10
Today’s Top 3 Financial News Stories:
Bloomberg.com – China’s Stocks Rise, Capping Third Weekly Gain; Banks Climb “Chinese officials shifted yesterday from emphasizing the country’s fast economic growth to defending its composition and sustainability, as GDP figures showed the economy surged 8.9 per cent through the year to the September quarter.”
FT.com — UK economy shrinks in third quarter “The UK economy shrank by 0.4 per cent in the third quarter, indicating that the deepest recession in a generation is not yet over. From a peak in the first quarter of 2008, the economy has now contracted by 5.9 per cent, the Office for National Statistics reported. The recession has now lasted for six quarters, the longest downturn since the second world war and on a par with that of 1979-81.”
MoscowTimes.com — Rupee, Ruble Use In Bilateral Trade? “Russia and India have agreed to study the possibility of using national currencies in bilateral trade, the Central Bank said in a statement Thursday. The decision was made at a meeting of the banking section of the Russia-India intergovernmental commission, it said.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Buy oil. Sell natural gas
One Response to “TFN eNews 10/23/2009: This is great news for investors!”
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down
October 23rd, 2009 at 5:25 pm
You’re exactly right, Democrats like Congressman Alan Grayson (Florida District
interpret free speech as a one-sided privilege granted by the Bill of Rights. When a Grayson liberal is opining, it’s free speech… When a conservative offers a contrasting viewpoint, it’s hateful and unpatriotic. But maybe that’s just the trial attorney part of his psyche talking.
Maybe it’s time to start looking for a Florida District 8 Representative who has the ability to be respectful to constituents with conflicting thoughts, perhaps someone like Patricia Sullivan?