Question about Celgene

I receive a good many questions about Celgene and the answer has been the same -- among the big and mega caps, Celgene has been too dependent on the growth of a single product, Thalomid (48% of sales) and has a weak product pipeline given its size. Thalomid sales are also slowing with growth around 2%-3% per quarter. And things got considerably more complicated in the past few weeks as generics company Barr Labs (BRL), filed with the FDA to bring generic Thalomid to market when the patent expires. This cannot happen any earlier than 30 months, probably a bit more, but is a clear warning shot about future revenues and earnings.

On the positive side, a new cancer drug, Revlimid, is growing rapidly on the way to being a blockbuster -- can it replace Thalomid short and long term? And even if it does, the valuations on this stock are downright bizarre compared to Genentech (DNA) and Biogen-IDEC (BIIB), mega caps with much deeper pipelines and, in the case of Genentech, much faster growth.

Bottom line -- you can do better in the cancer and the mega cap part of the market.

MS