Sara says local drug companies with strong product brands will be among the main targets.

They say when the U.S. sneezes, the whole world catches cold…Well, it’s time for a trip to the drug store. More and more often, that means Central and Eastern Europe.

For our Taipan VIP subscribers who attended our August Global Summit conference in San Francisco earlier this month, you may remember me mentioning a couple companies. Big names… Internationally recognized companies like Teva Pharmaceuticals (NASDAQ:TEVA) and Sanofi-Aventis (NYSE:SNY). They’ve set up shop in places like Hungary and the Czech Republic.

Hungary is one of the most developed pharmaceutical and biotechnology sectors in Central and Eastern Europe. Hungary boasts the strongest biotech sector among the twelve new EU member states. That has enticed seventy core biotech companies to set up shop in Hungary up to now and 170 companies have some kinds of biotech related activities. The reason? Cost savings. Companies can save 30-50% compared to Western European enterprises.

But there’s another side to the drug industry and it’s increasingly finding a home in this very region.

I’m talking about generic drugs.

This industry has seen some remarkable growth. Between 2003 and 2006, the generic drug sector has grown at an annual rate of 19% in Central and Eastern Europe. More recently, this area has grown by about 9% a year, and rakes in about $10 billion in sales.

McKinsey Quartery estimates that international companies can bring in somewhere in the neighborhood of $1 billion in additional sales each year.

One of the ways international companies become big player in these markets is through acquisition. With the growth of Central and Eastern European economies, small local companies have sprouted up everywhere.

These smaller companies have at times made quite an impression on market share. Names like Zentiva and Egis Pharmaceuticals might ring a bell to investors. Both are traded as pink sheets here in the U.S. and on a number of German exhanges.

Sanofi-Aventis hold a large stake in Zentive (about 24.9%), and even tried to take the company over. The offer was rejected, though. Another French company, Servier, owns 50.91% of Egis.

For now, drug companies, and especially generics, are still in a major growth spurt. Look for companies who have strong product brands. That’s different from company brands, and it really opens up the playing field for those smaller regional manufacturers.

This could spur even more acquisitions, so be on the look out!

Source: Cold War Drug Store

By using nanotech structures to modify existing drugs, small-cap pharma companies can sidestep the hefty costs and risks of new drug approval. This has traditionally been a major barrier to entry for start-ups. More importantly, early research has shown the altered drugs to be extremely effective against a broad range of serious diseases.

As new ventures approach IPO, they will create great investment opportunities. More from Patrick…

Not that long ago, the media were full of warnings that Big Pharma was running out of steam. Patents were expiring, and not enough new candidates were in the pipeline to keep them profitable. We don’t have much interest in Big Pharma here. Big pharmaceutical companies simply don’t yield really dramatic returns. Usually, it takes a small-cap or startup to do that. Until recently, the odds were stacked against small companies, due to the costs of drug approval, which have become enormous.

Regulators may have the right motives, but bureaucracies are necessarily risk averse. Approving a drug that ends up killing a few dozen people unexpectedly will end a career. Refusing to allow a drug onto the market that could save thousands of lives has little career risk. As a result, it has become increasingly difficult and expensive to get a drug to market.

In the last few months, however, we’ve seen a number of new drug treatments based on the convergence of nanotech and biotech. These drugs haven’t come from giant companies, however. They’ve come from small labs and companies thinking outside the traditional pharma box. This trend may help sidestep the FDA barrier while providing remarkable investment opportunities.

**********************************

JUMPER No. 1, Jan. 18, 2007: Defense stock soars 2,341% in 12 months — then another 47% after joining the NASDAQ Capital Market

Those who’d bought just $1,000 worth of this little-known defense stock only a year earlier could have been sitting on $24,410. And after its first four months on the NASDAQ — when this “jumper” zoomed up another 47% in value by May 22 — they’d have been able to cash in for more than $33,148.93!

But that’s nothing compared to what one microcap expert has lined up. In fact, he’s sitting on 18 companies that have just as much potential if not more… If you are one of the first 661 to sign up, you will receive the names and analysis for all 18, plus any other ones he comes out with in the coming year. So, check this out before it’s too late…

**********************************

The basic strategy being exploited is to use a nanotech structure to increase the efficiency of an existing drug. Contrary to the common misperception, not all nanotech structures are complex or metallic. Many researchers, in fact, prefer the term “molecularly precise.”

One molecularly precise structure of interest is the polymeric micelle. Many of these molecularly precise structures are made of common, benign components that self-assemble under the right controlled conditions. Researchers have found ways to use them to enclose other drug molecules for a variety of purposes. These micelles are not pharmaceutically active themselves, so they offer little biological hazard.

Researchers at Children’s Hospital Boston have used the technique to resurrect TNP-470, one of the first drugs tested that blocks angiogenesis. Angiogenesis is the unnatural growth of blood vessels that enable, among other things, tumor growth. TNP-470 is known to be effective against a broad range of cancers. The problem with the drug is that the body breaks it down easily, requiring high doses that may cause neurological side effects.

New tests on mice of the drug encapsulated in polymeric micelles have shown extraordinary effectiveness. The nanoparticles protect the TNP-470, taken orally and absorbed intact. Once the nanoparticles reach the tumor, they break down, slowly releasing the drug. Because angiogenesis is also involved in macular degeneration and other diseases, the drug and basic technology is of serious interest. Currently, the rights to the convergent drug, lodamin, are held by SynDevRx Inc., which is not yet traded. We’ll be watching as it and similar ventures approach IPO.

Source: Nanotech-Biotech Convergence and Opportunities Accelerating

Rob says that although Big Pharma stocks are cheap right now – bellwether Pfizer (PFE) is cheaper than it’s ever been – drugmakers are racing off the side of a cliff.

This is because when patents expire drugmakers loose billions of dollars to generic manufacturers.

But biotech drugs can’t be copied easily. And the sector is in an uptrend. Rob recommends using a biotech ETF to play this trend.

Biotech drugs are harder to copy than traditional drugs, making them more expensive to produce and less prone to future competition from generics. So drugmakers are willing to pay up to get a few biotech drugs in the pipeline.

In April, for example, the biggest Japanese pharmaceutical company – Takeda Pharmaceuticals – paid close to $9 billion to acquire Millennium Pharmaceuticals. In other words, Takeda handed Millennium shareholders a 53% profit over the previous day’s closing price. These deals will only get more frequent as Big Pharma gets more desperate. That’s why I love biotech stocks for the long term…

The problem with this long-term thesis is that biotech stocks in general have been “dead in the water” for the past few years. The sector enjoyed a big run from 2003 to 2005. It’s taken time to digest those gains… and money managers have been more focused on commodities since then.

But I think this “dead money” period may be ending…

In the past month, biotech was one of the few sectors to show positive returns. Oil stocks, financial stocks, and consumer-spending stocks have been killed. Many biotech stocks, on the other hand, are doing well. As Brian Hunt mentioned in yesterday’s Market Notes, the S&P Biotech ETF just hit a new high for the year.

There’s a good reason for this strength. A struggling economy won’t hurt biotech and medical as much as, say, an automaker, retailer, or restaurant chain… And biotech is one of the few industries showing solid sales growth.

A big holding in the S&P Biotech ETF, Gilead Sciences, just reported a 22% increase in quarterly sales growth. A slew of big biotech players report earnings next week, and I expect more great numbers.

Several ETFs give you broad exposure to biotech. Just enter “biotech” in the search box on www.etfconnect.com for a full list of funds. (A warning on the HOLDRs Biotech ETF – I’d avoid it… It’s ridiculously weighted toward just four high-profile companies.)

The really huge gains in biotech will be made with the best individual companies. Pick the right one and you could easily multiply your money by four or five times.

Whichever route you choose, I encourage you to pay attention to the biotech sector. It has a terrific long-term outlook and it’s getting started on another run higher.

Source: The Decade’s Most Irresistible Opportunity