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Dear Mr. Berko:

H.E., Bethlehem, Pa.

Dear H.E.:

Yes, I still like Pfizer Inc. (PFE-$16.60). You’ve got to love a company making Claritin so pharmacies can retail a bottle of 100 of those little suckers for $125. Did you know the ingredients in a bottle of 100 cost 71 cents, which is a 17,500 percent markup? Pfizer also makes Lipitor, and pharmacies retail a 100-pill bottle for $275. The cost of ingredients is $5.80, so the markup is 4,600 percent. Pfizer also makes Norvasc, and your friendly neighborhood pharmacists sell a 100-pill bottle for $185. The active ingredients cost 14 cents, which translates to a 132,000 percent markup. Pfizer also manufactures Zocor, which your pharmacist retails in a package of 50mg pills for $200. The active ingredients cost $1.75, so the markup is 11,300 percent. I like PFE’s 31 percent net profit margins, its $48 billion in revenues, its potentially fecund pipeline, its financial strength and its $1.28 dividend that yields 7.7 percent.

I also like Bristol-Myers Squibb Co. (BMY-$21.86), because many of its prescriptives have similar profit margins, and because its $1.24 dividend has a swell 5.7 percent yield. I also like BMY because this stock, which just a few years ago was trading in the lofty $65 to $80 range, is now trading 70 percent lower. I also like BMY because there’s talk on Wall Street that it could be an enticing marriage partner and that Sanofi-Aventis or Pfizer might offer a substantial dowry (the guesstimate is $31 per share) to take it to the altar. BMY has a panoply of great prescriptives, but it seems to have lost its momentum, and management can’t figure out how to jump-start the company again.

I really like Perrigo Co. (PRGO-$32.15), a prosperous $1.8 billion over-the-counter manufacturer that posted significantly higher 2008 earnings. Earnings exploded because management’s quality control initiatives, new operating efficiencies, margin expansions and a 26 percent revenue gain were responsible for a 90 percent increase in 2008 net income to $1.58 a share. I’m certain 2009 won’t replicate 2008, but I’m equally certain that 2009 earnings will closely approach $2 a share. And I really like PRGO because this company is the nation’s largest manufacturer of over-the-counter pharmaceuticals and nutritional products sold by supermarkets, drugstores, and mass merchandise chains (21 percent of revenues from Wal-Mart) under their own labels. And I like PRGO because it also produces prescription generic drugs, which are sold by most pharmacies in the nation.

I like PetMed Express Inc. (PETS-$15.01) because it’s riding on a wave of increased medical spending for pills, unguents, salves and liquids for dogs, cats and birds. It seems that most folks won’t hesitate to spend $50 or $60 a week on pills for their pets. Revenues for this online advertiser with a toll-free telephone number grew from $10 million in 2001 to $190 million in 2008. Earnings have grown just as fast from a deficit in 2001 to an expected 85 cents a share profit in 2008. Next year, Wall Street expects PETS to post a 15 percent increase in revenues and a 20 percent increase in net income. I think that in the next 12 months PETS could trade in the low $20s.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2008 Creators Syndicate, Inc.