Top Drug Companies’ Market Share in Home Region

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The pharmaceutical in industry is a multi-billion dollar industry especially in developed countries where drug prices are very high and consumers are able to afford them. For drug companies, the actual manufacturing of the drugs is just one portion of the overall costs of sale prices of the drugs. Marketing plays a huge role accounting for as much as 20% in some countries. For example, drug companies spend heavily on advertising in the US market where they are allowed to market directly to consumers via TV, radio, magazines, etc. So even though the majority consumers have no knowledge about the product being marketed to them the industry’s logic is here that they will ask their doctors to prescribe the particular drug. However in many countries direct marketing to consumers is illegal. These countries believe that most consumers are not medical experts and a drug is not a cheap consumer product such as a 99 cents burger that everyone can buy. In addition, direct advertising to consumers may induce them to buy them even though they may not need it medically.

Here is an interesting chart I came across recently on the market share of top drug companies:

Click to enlarge

Pharma-Market-Share-by-Home-Country

Source: DHL Global Connectedness Index (GCI), DHL

Via FT beyondbrics blog

Companies from the home region generate more than 50% of their sales from home regions. So for example, U.S. firms such as Pfizer Inc. (PFE), Merck & Co. Inc. (MRK) and Eli Lilly and Company (LLY)  depend on the domestic market for more than half of the annual sales. It is interesting to note that though many of the top pharma companies are multi-nationals their home market is still their key market.

You may also want to check out the Top 25 pharma companies here.

Disclosure: No Positions

US and UK Long Sovereign Bond Yields 1900-2012

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Here is an interesting chart showing the yield on long government bonds of US and UK. In the 1970s and 80s, British bonds yielded over 12% while US bonds over 7% and 10% respectively. Since then the yields have fallen dramatically for both country bonds. At the end of last year 20 year government bonds yields stood at 2.5% for the USA, 2.7% for the UK, 2.0% for Germany, and 1.0% for Switzerland.

Click to enlarge

US-UK-Long-Bond-Yields-1900-2012

 

Related ETFs:

iShares Lehman 7-10 Year Treasury Bond Fund (IEF)
iShares Lehman 10-20 Year Treasury Bond Fund (TLH)
SPDR Lehman Long Term Treasury ETF (TLO)
SPDR Lehman Intermediate Term Treasury ETF (ITE)
iShares Lehman TIPS Bond Fund (TIP)
Vanguard Long-Term Government Bond Index Fund (VGLT)

Source: Credit Suisse Global Investment Yearbook 2013, Credit Suisse

Comparing the Returns of Russian and U.S. Equities 1865 to 1917

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During the 1800s the U.S. was an emerging market. During that time the Tsars ruled Russia and  Russian equities trading on the St.Petersburg Stock Exchange performed better than U.S. equities on the New York Stock Exchange.

Click to enlarge

US-vs-Russian-Stocks-Returns-1865-to-1917

The above chart shows that Russian stocks vastly outperformed U.S. stocks from 1865 thru 1917. However a couple of fascinating points have to taken into account when reviewing the Russian stocks towards the early 1900s. From July 1914 the St. Petersburg Exchange was shut down due to World War I as denoted by the dotted gray line in the chart above. Then when the market opened in 1917 stocks rallied swiftly by about 20%. But the euphoria was short-lived as the Russian Revolution came along almost immediately. By October of 1917 the Tsarist government was overthrown and communists too control of the country. As a result of the revolution all Tsarist era securities became worthless.

So even though Russian stocks were great to hold from mid 1800s to early 1900s, all of a sudden they all became worthless . The key takeaway from this story is markets can turn upside down without warning due to political upheavals  Hence investors investing abroad have to monitor political developments in addition to company’s financials and macro-economic changes.

Source: Credit Suisse Global Investment Yearbook 2013, Credit Suisse

Hat Tip: The Big Picture

Here is the more recent long-term performance of Russia’s RTS Index vs S&P 500:

RTS-Index-SP-500

Source: Yahoo Finance

Related ETFs:

SPDR S&P 500 ETF (SPY)

Market Vectors® Russia ETF (RSX)

Disclosure: No Positions

Five Stocks Yielding More Than 4% Dividends For Long-Term Investment

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dividendsInvestors looking to add stocks for the long-term (5 years or more) can consider companies in the utility, telecom and other sectors that generally have high dividend yields. These sectors pay dividends of more than 4% – which is double of the yield on the S&P 500 index.

Five stocks currently yielding more than 4% dividends are listed below for consideration. These are stable and well-established companies with consistent dividend payouts year after year. Holding these stocks for more than 5-years should yield above average returns especially with reinvestment of dividends.

1.Company: AT&T Inc (T)
Current Dividend Yield: 5.10%
Sector: Telecom

2.Company: Verizon Communications Inc (VZ)
Current Dividend Yield: 4.64%
Sector: Telecom

3.Company: Exelon Corp (EXC)
Current Dividend Yield: 6.76%
Sector: Electric utilities

4.Company: Dominion Resources Inc (D)
Current Dividend Yield: 4.14%
Sector: Electric utilities

5.Company: Consolidated Edison Inc (ED)
Current Dividend Yield: 4.30%
Sector: Electric utilities

Note: Dividend yields noted are as of Feb 8, 2013

Disclosure: No Positions

Should You Invest in Food Retailers ?

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Food retail is a very low margin business in the U.S. The industry is extremely competitive and from an investment point most of them do not seem to offer good returns to investors. Fierce competition drives down prices on a daily basis and companies have to eke a profit on huge sales volumes. Another factor that must be considered is that Wal-Mart and its Sam’s club units try to grab more share of the business from food retailers.

Four of the top publicly-traded food retailers are listed below:

S.No.CountryADRs List
1BulgariaComing Soon
2CroatiaCroatia ADRs
3Czech RepublicCzech ADRs (All)
4GeorgiaComing Soon
5HungaryHungary ADRs (All)
6KazakhstanComing Soon
7LatviaComing Soon
8LithuaniaLithuania ADRs
9PolandPoland ADRs (All)
10RomaniaRomania ADRs
11RussiaRussia ADRs (Only Exchange Listed),Russia ADRs (All)
12UkraineUkraine ADRs (All)

Cincinnati, OH-based Kroger (KR) has 2,435 supermarkets and multi-department stores and many other varieties of stores in most of the midwest and in the Southern states.Its profit margin last year was just 0.78%. In five years the stock has been an average performer.

The grocery chain Supervalue(SVU) operates stores throughout the country. The profit margin in 2012 was negative 1.37% and the stock has fallen about 42% in 52 weeks.

Safeway Inc(SWY) runs 1,678 stores in California, Hawaii, Oregon, Washington, Alaska, Colorado, Arizona, Texas, the Chicago metropolitan area and the Mid-Atlantic region. In Canada it has stores mainly in British Columbia, Alberta and Manitoba/Saskatchewan. It has a profit margin of 1.20% and the dividend yield is decent at 3.43%.

Whole Foods Market, Inc. (WFM) is a natural and organic foods supermarkets and operates 311 stores, of which 299 stores were in 38 United States and the District of Columbia; seven stores in Canada; and five in the United Kingdom at the end of 2011. Whole Foods has a unique business model and is profitable. In the past 52 weeks the NASDAQ-listed company’s stock is up about 18.0% which is extremely good in this industry.

Overall grocery retailing is a cut-throat business and though some of these companies are publicly-traded they are not the best for investment. They produce average returns with the exception of Whole Foods and most have low to below average dividend yields as well. Hence investors may want to avoid investing in this sector or invest a small percentage of their assets.

Note: Dividend yields noted are as of Feb 13, 2013

Disclosure: No Positions