Jazz Pharmaceuticals PLC
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
$423.00 | Sngn | Yjnjwmkd |
No-Moat Jazz's GW Acquisition Helps Diversify Portfolio; $140 Fair Value Estimate
Business Strategy and Outlook
Jazz Pharmaceuticals added its leading drug, Xyrem, to its portfolio in 2005 with the acquisition of Orphan Medical for about $123 million. This was a great price for the then newly approved drug, which became a blockbuster. At that point, Xyrem was the only approved treatment for cataplexy (sudden muscle weakness or paralysis) in narcolepsy; it has since garnered additional approvals for excessive daytime sleepiness in patients with narcolepsy. Its strong efficacy has propelled its success in the difficult-to-treat sleep indication, but generic entry is on the horizon, leaving a cloud of uncertainty for the company. Jazz reached a settlement in 2017 with Hikma Pharmaceuticals to not allow generics on the market until January 2023. Jazz will retain some economic profit from royalties on generic sales and a shared distribution program, but we expect its returns to decline following Xyrem's generic entry.