King Pharmaceuticals makes list of fast growers: drug manufacturer expects 2002 revenues to increase by more than 30%

King Pharmaceuticals (NYSE: KG; Recent price: U.S.$18.35) makes generic and brand-name drugs. Its branded medicines include cardiovascular, critical care, anti-infective, and women's health products. The company contracts its idle manufacturing capacity to other drug manufacturers.

King boasts the largest profit margin growth in the industry. Its five-year average net margin of 17% rose to 27% during the past 12 months. It was recently featured in Fortune magazine as one of the 100 fastest-growing companies for 2002.

The company has two highly profitable brands: Altace, used to treat hypertension, and Levoxyl, a thyroid-disorder drug. Altace is currently the only ACE inhibitor with clinical data to support its efficacy claim in reducing the risks of death, heart attacks, and strokes. King, which was founded in 1994, has since acquired some 50 drugs and repositioned them.

King's revenues are expected to increase over 30% in 2002, thanks to another strong growth in sales of Altace this year, growth in other products and greater contributions from four drugs acquired from Bristol-Myers Squibb in August, 2001. Higher sales are also forecast for Thrombin topical hemostat and Levoxyl thyroid treatments. Levoxyl sales have been helped by regulatory problems at a major competitor.

The widespread weakness in the specialty pharmaceutical sector has also affected King, as its share price has fallen substantially.

King Pharmaceuticals' price earnings ratio compares very favourably with the companies in this sector, indicating a positive outlook for the stock in the next six to 12 months. The stock is for value-oriented investors with an eye for growth.