Increased Competition No Big Deal For Blackmores

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By Rudi Filapek-Vandyck

Healthcare and Life Sciences analysts at ABN Amro Morgans point out the sale of  Primary Healthcare’s ((PRY)) consumer operations to Sanofi-Aventis is likely to have an impact on Blackmores ((BKL)). The company currently has a market share of around 22% of the $1bn market in Australia for vitamins, mineral and foodsupplements and the analysts believe annual growth of this market is around 6-7%.

They point out the new owner of brand names such as Cenovis, Nature’Own and Microgenics now has market share of circa 21% and is bound to rejuvenate competition in the sector.

While this poses the obvious short term risks, ABN Amro Morgans nevertheless believes Blackmores’ strong brand plus management’s “strong marketing capabilities” are to prevail and the stockbroker therefore sees no reason not to be positive on the company’s future.

ABN Amro Morgans currently rates the stock as Hold, but that has more to do with the current valuation of the stock than with the new threat or outlook for the company.

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