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Why this ASX healthcare stock shot 18% higher yesterday

The Mayne Pharma Group Ltd (ASX: MYX) share price jumped 18.87% higher in yesterday’s trade after a significant announcement from the Aussie pharmaceuticals group.

What did Mayne Pharma announce yesterday?

Before yesterday’s market open, Mayne Pharma announced that it had signed an exclusive license and supply agreement for an oral contraceptive with its long-term partner, Mithra Pharmaceuticals.

The two pharmaceutical groups announced strong expected earnings from E4/DRSP, following the applicable regulatory approvals, with a big expected boost from US sales.

The company expects to have the new, commercialised contraceptive product on sale from as early as 2021 with the potential to realise peak net sales of US$200 million per year or more.

Should you buy Mayne Pharma shares?

Given management put the value of the US contraceptive market at US$5.4 billion (A$8.05 billion), it’s hard to say what the long-term prospects of Mayne Pharma are at the moment.

While this new product launch with Mithra should boost earnings (assuming it is approved for sale), my concern is that the Mayne Pharma share price has more than halved in the last 12 months.

The ASX Healthcare sector could be a great place to diversify into given its historically defensive nature, but I think there could be better options than Mayne Pharma at the moment.

What are some alternatives to Mayne Pharma?

If you’re interested in buying some ASX healthcare stocks, I think CSL Limited (ASX: CSL) could be a good option at the moment.

While the CSL share price is currently valued at $234.65 and not far from its 52-week high, it has also climbed 218.30% higher in the last 5 years.

The company also pays a 0.98% per annum dividend yield and boasts a market cap of $106.5 billion, but does have a price-to-earnings ratio of 37.6x, which is a little lofty.

Another option amongst the large-cap ASX healthcare stocks is Ramsay Health Care Limited (ASX: RHC), which has seen some strong share price growth of its own in 2019.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.