European biopharma: "Innovate to survive" - Morgan Stanley
14/12/2018 08:50
** Morgan Stanley is cautious on European biopharma, and
favors cos with defensive fundamentals carrying high innovation
risk and low commercial execution risk
** MS expects innovation and pricing pressure initiatives
will evolve hand in glove
** In this environment, biopharma "must innovate to
survive", MS says
** Roche ROG.S is MS's "top pick" on recognising a
pipeline innovation change, while biosimilar erosion will be
more benign for the stock than feared, the broker says
** While Roche is building an "interesting" mid-stage
pipeline, Bank of America Merrill Lynch ("neutral") thinks this
is "too far out"
** BAML's top picks are Novartis NOVN.S (metamorphosis
into a focused innovative biopharma) and AstraZeneca AZN.L
(product launches, Phase III catalysts)
** MS starts Bayer BAYGn.DE with "overweight" on the
glyphosate litigation de-risking; BAML ("buy") assumes Bayer's
liability could be in the $1-5 bln range
** MS initiates GlaxoSmithKline GSK.L with "underweight"
on sector risk-return profile, innovation challenges, HIV
pressures and GBP volatility risk
** According to BAML ("neutral"), "near-term headwinds
offset longer-term opportunities" for GSK
((zuzanna.szymanska@tr.com))