Mallinckrodt Stock – Buy MNK for Its Pharma Prowess

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What was the first company to offer healthcare to its workers (in 1883)?

mallinckrodt-mnk-stock-185What was the first company to begin large scale production of codeine and morphine as analgesics (in 1898)?

What company produced all the uranium oxide to fuel the Manhattan Project and the world’s first self-sustaining nuclear reaction (in 1942)?

Who was the leading manufacturer of hot, new analgesic called Tylenol in 1971?

All the answers are the same: Mallinckrodt PLC (NYSE:MNK).

Mallinckrodt is certainly not a household name like Johnson & Johnson (JNJ), but MNK has quite an American history, even if it’s now headquartered in Ireland now.

Three brothers started MNK in 1840 in St. Louis, Missouri, and MNK has since become a major pharmaceutical player on the global stage.

Mallinckrodt’s recent quarterly numbers have put it in the headlines. Net sales were up 60% year over year; gross profit was up 71%; and net income went from $51 million in Q1 2014 to $214 million in Q1 2015 (ended Dec. 26, 2014).

Much of these stunning gains can be attributed to a pair of shrewd acquisitions MNK made in 2014 that were perfect fits into its specialty lines of generics, analgesics and specialty drugs for autoimmune and rare diseases.

MNK’s acquisition of Questcor Pharmaceuticals Inc in August 2014 for around $6 billion essentially absorbed Questcor into MNK’s Autoimmune and Rare Diseases division. Mallinckrodt’s main interest was adding Questcor’s H.P. Acthar, which treats lupus, multiple sclerosis, sarcoidosis and patients that have diseases with similar pathologies.

The gel is designed to provide extended release of ACTH, which stimulates the adrenal cortex gland to secrete cortisol, corticosterone and aldosterone. This has been shown in controlled clinical trials to be effective in speeding the resolution of acute MS attacks as well as similar symptoms in other neuro-muscular diseases.

In March 2014, purchased Cadence Pharmaceuticals, Inc. for $1.4 billion to add to its impressive analgesics business. Cadence developed Ofirmev a proprietary injectable acetaminophen that is extremely popular in hospitals for delivering pain relief, fever reduction and pain management complimenting opioid use.

Considering MNK was one of the first pharmas to blend acetaminophen when it hit the scene in the 1970s, it is only fitting it should get this next generation use of the analgesic.

Both these acquisitions were immediately accretive to MNK’s top and bottom lines, hence the blockbuster numbers it posted. Net sales in the Specialty Brands segment, where both these acquisitions now reside, was up five-fold in Q1 (from $59 million to $373 million year over year). While other divisions grew, nothing grew on this scale.

But this is an indication that MNK is now a different company than it was up until 2015. The analysts upgrades and the reduction in short interest on MNK stock are clear evidence of that.

It’s also evidence that MNK is being managed by some very smart people. Two major acquisitions that are ingested and begin to kick off significant results in a couple quarters is impressive indeed.

Bottom line: You have well-established, low-profile company that has made two strategic acquisitions that make it extremely relevant as the U.S. healthcare system restructures. Plus, the growing inherent demand for its specialty autoimmune and analgesics in a graying America, along with its strong line of insurer friendly generics, make MNK’s story for the next century a compelling one.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2015/02/mallinckrodt-mnk-pharma-pharmaceuticals-analgesics/.

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