He says that, “ while few other sectors can boast recession resilience, the health care sector is proving to be a sector that should be part of everyone’s portfolio…”

This from David:

Several weeks ago, we focused on the distribution side of the health care industry as yet another overlooked area that should continue to do well during our economic downturn.

We discussed one of the largest “Grainger-like” companies in the health care industry, Cardinal Health, Inc. (NYSE: CAH). Cardinal is an $87 billion global manufacturer, supplier and distributor of medical products.

Given the sheer size of the medical equipment and drug market – the global pharmaceutical market alone is estimated to be north of $700 billion annually – it shouldn’t be too surprising that Cardinal has a competitor or two…

One of its biggest is AmerisourceBergen Corporation (NYSE: ABC), a large, global pharmaceutical services company with operations in Canada, Great Britain and the United States.

AmerisourceBergen Corporation’s Products & Services

AmerisourceBergen Corporation was formed in August 2001, with the merger of Amerisouce and Bergen Brunswig, the company’s 13,000 employees provide its 27,000 customers with a wide range of products and services:

• Pharmaceutical distribution and delivery to hospitals, critical care facilities, retail pharmacies, clinics and long-term care facilities.

• Specialty pharmaceutical delivery services directly to physicians.

• Delivery of over-the-counter and health and beauty aids.

• Packaging, logistics and commercialization services for pharmacies and drug manufacturers.

• Consulting services in each of the above areas.

One of AmerisourceBergen’s growth drivers is specialty drugs, an area that’s growing faster than the overall drug market.

These drugs are normally administered directly by physicians, and include cancer-fighting oncology products, plasma and plasma derivatives, vaccines, ophthalmic drugs for the eyes and dialysis drugs.

AmerisourceBergen Corporation – A Leader In Specialty Drug Distribution

AmerisourceBergen Corporation is the undisputed leader in the specialty drug distribution market:

• It’s the largest oncology products distributor in the United States, delivering products to more than 4,600 oncologists.

• It’s the largest physicians services organization in America.

• It’s the biggest nephrology/dialysis products distributor.

• It’s the largest blood plasma products distributor.

• It has the biggest market share in ophthalmology products.

Another growth story will be the oncology drug market. There are currently 750 different medicines in development for cancer, making it the strongest area of drug development.

The company estimates that the market for oncology drugs alone will be roughly $80 billion annually by 2012. Currently oncology drugs are only 2% of the company’s revenue, representing a huge upside potential as many new drugs come on-line.

AmerisourceBergen’s Biggest Growth Area – Generic Drugs

Perhaps the biggest growth area for AmerisourceBergen is generic drugs. The company has formed key relationships with its manufacturers and its biggest customers through 2011.

But here’s the best part: Over the next five years, patents will expire on many top branded drugs representing over $85 billion in sales. The soon-to-be-available generic forms of Flomax, Lipitor, Prevacid and six other blockbuster drugs should be huge sales drivers for the company.

And while it’s true that generics sell for as much as 80% less than their branded counterparts, there’s a great upside: Gross margins are up to five times higher, resulting in similar gross profit numbers on much reduced receivables.

It’s all paying off in spades: Last year’s earnings were up a whopping 19% from 2007, on a 7% increase in overall revenue. This is even more remarkable when you consider an industry-wide annual growth rate of only 1% to 2%.

Not too unlike other companies in the drug distribution space, AmerisourceBergen has grown both organically and through acquisitions, completing nine of them in the last three years.

It’s increased the number of products it handles as well, with nearly 32,000 different items in its distribution system. Most of these products can be ordered one day, and delivered the next.

All this bodes well for the AmerisourceBergen’s future, and the company expects 2009 revenue growth of 5% to 7%. And while few other sectors can boast recession resilience, the health care sector is proving to be a sector that should be part of everyone’s portfolio, while the broader market continues to struggle.

Source: AmerisourceBergen Corporation: Increase the “Health” of your Portfolio

The debt, the deficit, two wars without end, the banking crisis, the mortgage crisis, the worldwide economic slow down, Social Security, a deadlocked partisan congress, health care, a tax system that everyone thinks is unfair, collapsing US auto manufacturers, jobs being exported at light speed, the defense of our northern and southern borders, a recession, still no energy policy, and what appears to be a complete collapse of our image abroad.

Why would anyone want this job? It’s beyond me. The real question is now that he has done what seemed like the impossible, how will it affect the markets?

This is a long and short-term issue. In the short term, the markets should rally. If for no other reason than the media and press will ease up on the hugely negative pounding they have been delivering for the past two years.

A rally is also likely because, as everyone knows, the market hates uncertainty. Even though this race has been all but a certainty for a long time, it has added to the mood of “what’s next.”

More specifically, and on the bright side, we should see good things for the solar and alternative energy sectors, biotechnology, the health care industry, and if he makes good on his promises to restore jobs to the middle class, manufacturing could see a jump.

Long term is another issue. We are in several very tough spots. We have a full-blown recession and the last thing we need in this environment is a tax increase. It could be fatal.

On the downside, pharmaceuticals will most likely take a hit. He is pretty clear he wants to change how business is done in this area. Defense contractors stand to lose if he makes good on getting our troops out of Iraq and Afghanistan, and if he is as pro new energy sources, as he claims, traditional energy stocks could be in for a rough time.

All of Obama’s promises about increasing taxes on the so-called “wealthy individuals” could be the proverbial last straw. If the President elect makes good on his promise to redistribute wealth by increasing taxes in this economic environment, we could have a longer and deeper recession than anyone has predicted.

The key to all of this is that all of these were campaign promises. Campaigns to me are a lot like our first few years in college, and last few years of high school. We had all the answers and no responsibilities. It’s easy to talk change and promise the middle class another New Deal, but what he will actually do is anyone’s guess.

The best thing the markets have going for them is that Obama is a very, very smart guy. And as smart guys usually do, they surround themselves with smart people. Hopefully, these smart people will help the new president see that most of the ideas used in the campaign to get votes need to take a back seat to the realities we face as a nation.

If this “smart guy” scenario plays out, we could do very well with this administration. When it comes to the markets, recent Democrats actually have a better track record than Republicans. If Mr. Obama is enough of a politician to beat the odds and win this election, I have to believe he is also enough of a realist to look at the situation he has inherited and deal with it appropriately.

History has proven that the markets do well no matter who is President. Most conservatives expected the world to end when Clinton was elected. Liberals threatened to leave the country if Bush was elected. Everyone under the age of 30 had heart palpitations when Nixon won in ‘68. The markets always find a way to make it to the next election.

Source: Congratulations President Elect Obama