Publications
Partners
Tiger Brands' share price has been hammered even more on the revelation that the group's healthcare business - Adcock Ingram, specifically Adcock Ingram Critical Care - is under investigation for alleged collusion with other companies with regard to the market for intravenous drips. As they're essential for anybody in a serious condition in hospital, the allegations leave a nasty impression.
And what a sad history Adcock Ingram Critical Care has. Readers as old as I might remember, probably more than 15 years ago, when some babies died in hospitals. Guess which drips they were attached to? That had a devastating effect on Adcock Ingram Critical Care. I remember the MD at the time taking a lot of personal strain.
But quick picks aren't about Adcock Ingram and Tiger Brands (though the latter could become a quick pick if its price keeps going down). You might have noticed how other shares in the sector - Aspen Pharmacare and Enaleni - also dipped the day the Competition Commission investigation was announced. That's probably normal: Investors' gut reaction was to be nervous about pharmaceutical companies in general.
Aspen has since recovered a bit, up by nearly 2%. Enaleni is still going down - more than 3% since the announcement.
I think both companies are probably clean when it comes to price-fixing. They compete vigorously. And though you can never be sure, they seem above board in an industry that's apparently been known in the past for collusion.
For example, as pointed out to me by a senior executive in the industry, why don't CEOs raise questions when, month after month, the manager of a particular division reports exactly the same market share? It tends to be a round number. C'mon, don't tell me a particular pharmaceutical product has 65% of the market for 12 months in a row without the boss becoming just a little suspicious.
Anyway, Aspen and Enaleni could be worth buying now, especially Aspen before its interim results are released on 26 February. Pharmaceutical stocks tend to be good defensive shares in a tricky market, as we have now, and as the Adcock Ingram saga subsides, investors will probably be looking at those counters. So get in first.
You might notice my usual space has been cut in half because my editor says I talk (write) too much. So I have to shut up now - maybe I'll get my full page back next week.
