Jim Cramer tells it like it is: "Pfizer is really a bad bond masquerading as a stock"
Cramer's 'Mad Money' Recap: Bye-Bye Big Pharma
"Everyone's asking about big pharma, but I keep hoping they mean big farms," he said. Unfortunately, nobody ever does.
Cramer said he always responds in the same way, with "No, I don't like big pharma." But because it's never enough to say he doesn't like these stocks, Cramer is dedicating today's show to big pharma.
Cramer said he doesn't mind that the big drug companies are overcharging sick people. In fact, he said, he wishes they would charge even more, because that would change the bears to bulls. He said the real reason he doesn't like this sector is because the companies have lost their growth potential and haven't made any big discoveries.
Cramer said his dislike for the sector goes beyond mere patent expirations. Generics in the group are coming out even before patents expire. In addition, many of the new drugs coming out are bad and facing lawsuits, he said.
Plus, the easy drugs have already been found, and now companies will need more time and resources to come up with new products, he said.
Big pharma is a "bad group." But even in a bad group, there are a couple of picks worth holding or buying, Cramer said. However, before naming his favorite three big pharma plays, Cramer called out a couple of stocks in the sector that he wouldn't touch: Pfizer and Johnson & Johnson (JNJ - Cramer's Take - Stockpickr - Rating).
"Pfizer is really a bad bond masquerading as a stock," he said. Plus, it has the worst of both worlds: "a weak pipe and patent expiration."
And that pretty much says it the way I've been telling it way before Jim changed his tune. And here's another report by PWC, covered by Ed Silverman, saying the same thing: Big Pharma Can’t Go On As It Does: Report.