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Mike,

Keep in mind also that part of the reason for Merck's lower margins are its Merck-Medco divisions which is a pharmaceutical benefits manager. This is more of a low margin, high turnover type of business.

With Johnson and Johnson, they have the consumer products division (band-aids, shampoo, etc) that drags down margins from the Pharmaceutical and Professional Divisions.

Both of these give the companies slightly more diversification than a pure play drug company. I once read that with the Merck-Medco division, Merck is positioned well in case pharmas become more regulated.

yofluke

Disclaimer: I owned both MRK and JNJ

----
hey folks,

I have been examining the largest six pharmaceutical companies (GSK, PFE, MRK, JNJ, BMY, NVS), and I need to whittle these down to at least four so I can do more extensive research. I used the Rule Maker spreadsheet to evaluate all six business purely on their fundamentals. When I do this, Johnson and Johnson and Merck both have the lowest scores (due to lower gross and net margins, slower sales growth, etc.) Can anyone here suggest a reason why I should keep these guys on the list? I feel like I need to do something to keep my research on track since I have limited time, and right now according to the spreadsheet (based purely on the most recent 10-Qs of each company, with none of the subjective numbers filled in by me), GlaxoSmithKline (28), Novartis (23), Pfizer (22), and Bristoll-Myers-Squibb (20) look most attractive to me, in that order. Again, those numbers reflect NONE of the subjective categories being filled in by me-- that's what I will do during the next phase of research :-)

what do you all think? Thanks!

-Mike
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