Good Medicine at Bargain PricesLearn more about this firm
We have been long-term owners of Amgen (AMGN), Merck (MRK) and Pfizer (PFE) among the major pharma/biotech companies. We believe they trade at a ridiculous discount to similar companies in other industries. However, we think we understand why they were underperforming similar stocks and it was a self-inflicted wound. The industry allowed the media to define them as drug companies.
Drugs are something that First Lady Nancy Reagan taught us to say “no” to back in the 1980s. These companies don’t sell drugs, cannabis companies sell drugs. These companies sell medicine and their public relations/advertising people have missed the boat for ten years until just recently. The pandemic has provoked a rethinking of pharma-biotech in our society.
We were watching TV recently and Eli Lilly ran an advertisement where they showed numerous medicines they provide. At the end of the commercial, they introduced their new tag line, Eli Lilly - “A Medicine Company.” This is spot on and important for long-duration common stock investors.
Let’s start with how cheap these stocks are relative to the S&P 500 Index compared to the last 20 years: