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U.S. futures are pointing to a mixed open once again on what should be light trading day, with most European and Asian markets closed today. With light trading we find Europe is mixed with the FTSE in the green while the DAX, CAC 40, and SMI are solidly in the red.
The Indian pharmaceutical industry is coming into its own as technology and the marketplace mature. But it has some tricky negotiations ahead if it wants to prosper and coexist with the multi-national giants in the business.
The next wave of Trading the Globe specials is airing every Friday in October on CNBC. Here is a rundown of the stories we dug into tonight.
With the rupee back at its credit-crunch lows, some traders are hoping that Indian drug exporters are poised to become both more competitive on a global stage and more profitable as well.
CNBC launched the first of its half-hour Trading the Globe specials today. Tim Seymour hosts top emerging market traders in their discussion of global investment ideas.
Replace the Dow with emerging markets stocks
The sun is setting on a decade of losses in the benchmark U.S. index, the Dow Jones Industrial Average. Now traders are sending their money to every corner of the globe on the hunt for growth and returns.
If you want to replace the Dow in your portfolio, you could see much better returns. Every one of the emerging Dow doppelgangers in this list (designed by Tim Seymour himself) is a pretty good match for one of the giants of U.S. industry — and on average, they are up over 200% over the last decade.
Dow component Emerging doppelganger Alcoa (AA, quote) Vale (VALE, quote) American Express (AXP, quote) Banco Bradesco (BBD, quote) AT&T (T, quote) China Mobile (CHL, quote) Boeing (BA, quote) Embraer (ERJ, quote) Bank of America (BAC, quote) IDC Bank (IDCBY, quote) Caterpillar (CAT, quote) Kubota (KUB, quote) Chevron (CVX, quote) Gazprom (OGZPY, quote) Cisco (CSCO, quote) United Micro (UMC, quote) Coca-Cola (KO, quote) Fomento MX (FMX, quote) DuPont (DD, quote) Sasol (SSL, quote) Disney (DIS, quote) Televisa (TV, quote) ExxonMobil (XOM, quote) Petrobras (PBR, quote) General Electric (GE, quote) Reliance Industries (no ADR) Home Depot (HD, quote) Homex (HXM, quote) Hewlett-Packard (HPQ, quote) Lenovo (LNVGY, quote) IBM (IBM, quote) Infosys (INFY, quote) Intel (INTC, quote) Taiwan Semiconductor (TSM, quote) JP Morgan (JPM, quote) ICICI Bank (IBN, quote) Johnson & Johnson (JNJ, quote) Dr Reddys (RDY, quote) Kraft (KFT, quote) Brasil Foods (BFRS, quote) McDonalds (MCD, quote) Yum Brands (YUM, quote) Microsoft (MSFT, quote) SAP (SAP, quote) Merck (MRK, quote) Ranbaxy (no ADR) 3M (MMM, quote) Samsung (no ADR) Pfizer (PFE, quote) Teva (TEVA, quote) Procter & Gamble (PG, quote) Unilever (UN, quote) Travelers (TRV, quote) China Life (LFC, quote) United Technologies (UTX, quote) Hyundai (no ADR) Verizon (VZ, quote) China Unicom (CHU, quote) Walmart (WMT, quote) Walmart Mexico (WMMVY, quote)
The next growth engine
As rising debt and slowing demand hobble the Western world, traders are hunting for the globe
Abbott Laboratories’ $3.7 billion acquisition of Piramal Healthcare vaults the U.S. company to the top of the booming Indian drug business and raises questions about future M&A ahead.
ABT is paying $2.12 billion in cash for the company, a unit of India’s sprawling Piramal conglomerate, and will make four annual $400 million installments.
India is currently an $8 billion drug market and is looking at an estimated 15% annualized growth over the next five years. Compared to relatively flat growth in the developed world, this is extremely attractive to companies like ABT and we should expect similar deals ahead. The question is where they will come from and how U.S. investors can get involved.
Now that Piramal is off the board, the big end of the fragmented Indian drug industry looks a little sewn up. Ranbaxy Labs, the nation’s top pharma, was absorbed into Japanese pharma Daiichi-Sankyo in 2008. Dr Reddy’s (RDY) has partnered with GlaxoSmithKline (GSK), which is a big player in India under its own umbrella.
Going down the list, Aurobindo Pharma is aligned with Pfizer (PFE), but with a market cap of only about $1 billion could easily tempt a foreign takeout offer — friendly or otherwise.
Below that point, global big pharma can go fishing for plenty of small-cap opportunities. Above it, there are a few big independent names like Sun Pharma (with a $7 billion market cap) and privately held Cipro that may one day emerge as partners in a merger of equals or, especially in Sun’s case, as consolidators in their own right.
As the only ADR in this space, you might be well served by owning RDY. Or at this point, you could simply buy ABT:
