CSL's growth to slow as competition rises

Intelligent Investor

Independent Financial Research

Plasma products such as antibodies and albumin are medical necessities. In many cases there are simply no viable substitutes - at any price. Hospitals and insurers can't walk away which gives CSL (ASX: CSL) significant pricing power. This, combined with CSL's dominant market position, economies of scale, and the industry's barriers to entry, have made it a favourite of investors. The company increased operating profits 12% over the past 12 months - with an industry-leading margin of 31%. But sustaining those levels over the next few years won't be easy. CSL has benefited in recent years from capacity constraints at competitors, with the company's sales of immunoglobulin growing 22% over the past two years, compared to 14% for the industry as a whole. CSL's largest competitor, Baxter, had to temporarily close its Los Angeles fractionating facility in 2013 while it was being upgraded, which led to a supply bottleneck. However, the Baxter plant is now back online and supply is returning to normal... Read the full article: (VIEW LINK)


Independent Financial Research

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