CSL - It's Back?, page-3

re: CSL - 10% rise for $5million revenue ? Hmmm This from todays AFR

CSL given a timely transfusion 19/06/02

AFR News - 19.06.02 03:34

Brett Clegg


Shares in CSL staged a sharp turnaround yesterday, reversing a five session losing streak, after the Melbourne-based bio-pharmaceutical company won an extension until end of June 2004 to be sole supplier of blood-based products to the Federal Government.

Though the financial details were not provided in the release by Australia's chief medical officer, Richard Smallwood, it is believed to represent only a modest $5 million in revenues for CSL. Market participants said that an end to short-selling in the stock by hedge funds had alleviated downward pressure while a new research report from Salomon Smith Barney helped sentiment.

CSL shares rocketed $1.83, or 6.3 per cent, to $31.10. The stock had touched a two-year low of $28 as the market panicked that increased supply in US intravenous immunoglobulin (IVIG) would result in sustained low prices for CSL's ZLB bioplasma blood fractionation unit.

IVIG is a purified blood product which strips out antibodies to be used in drugs to fight inflammatory and infectious diseases.

Analysts have pared their 2003 profit forecasts in the past few weeks on the basis of lower IVIG prices after Alpha Therapeutics embarked on a program of discounting to boost market share and the American Red Cross cut prices on its Panglobulin IVIG which competes against ZLB IVIG at $US40 ($71.30) a gram.

"Our understanding is that again this is a temporary phenomenon as a result of increased donation rates following September 11," said Salomon Smith Barney analyst Andrew Goodsall.

"At that time additional blood volunteers respond to the perceived national emergency. The effect is likely to be temporary as industry information has shown that most of the new donors have not returned."

Mr Goodsall said that CSL's share price implied average IVIG pricing for the next eight years of less than $US30 a gram, a scenario it "rates as highly unlikely".

He believes annual IVIG demand growth is sustainable at 10 per cent with the present bubble in blood supply likely to recede, particularly with new deferral restrictions to be introduced on US blood donors following the Mad Cow disease scare. He estimated supply growth would settle back around 5 per cent.