CSL: Australia's best resource stock - Part 2

Intelligent Investor

Independent Financial Research

Drugs, money, blood – even allegations of cartel-like behaviour: the plasma industry has all the ingredients of a crime thriller. In Part 1 (VIEW LINK) we explained how CSL’s (ASX: CSL) large, reliable source of raw plasma and its status as the lowest-cost producer make it the industry’s equivalent of Saudi Arabia. In 2009, the prestigious Mayo Clinic and a group of 20 other US hospitals launched a class action lawsuit against CSL and its largest competitor, Baxter, for allegedly constricting the supply of blood products to drive up prices. The case was settled outside of court, so we don’t know how things washed up – except to say that CSL and Baxter weren’t found guilty of any wrongdoing. But you don’t have to operate a cartel to reap the economic benefits of a tightly supplied market: a dominant market share, barriers to entry, and discipline will do the job perfectly well. (VIEW LINK)

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Independent Financial Research

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