csl research, page-11

re: csl - back on the bullish track? From Egoli:

CSL Ltd

Demand and price surprises at the Global Plasma Forum

Citigroup Smith Barney have ‘immersed ourselves' in plasma for the past 48hrs - meeting with manufacturers and distributors at the key industry forum.

IVIG supply in the US is running ‘tight as a drum' with manufacturers meeting base requirements on a month-to-month basis and there appears to be less than a month's supply with distributors. One survey shows 14% of doctors believe they are short IVIG due to supply constraints. There are also shortages of certain concentrates and brands of Albumin. Fractionators are talking about modest increases in output, via yield and some additional throughput.

Prices are moving up, with major GPO contracts to be renegotiated by CY06, but fractionators are consistent in their message that they will keep prices sensible with volume release – Citigroup Smith Barney are not convinced on the precision with which this can be managed.

They expect CSL to be able to negotiate a realised price of US$45-50/g (this will still lag competitors so Citigroup Smith Barney expect review options), with Albumin at US$18-20 per vial, most impacting 2HFY06. Clotting factors prices are expected to remain stable, though global volumes are going up. EUR and ROW pricing is also edging up - message is weighted average sale per litre is going up.

It is clear that CSL is in the drivers seat. CSL's FY06 budget may not be done yet - but CSL can set budget knowing it will sell all volume released to market and prices risk being better than targets.