The CSL Limited (ASX: CSL) share price is down 1.7% in afternoon trading on Friday to $267.82.
The king of the ASX 200 biotechs had an unexciting year in FY23 — at least in terms of share price growth.
As the chart below shows, the CSL share price pretty much moved sideways in a tight range bound pattern between the late $260s to the early $310s.
Overall, CSL shares gained just 3.1% from the close of trade on 30 June 2022 to 30 June 2023. The stock started FY23 at $269.06 per share and finished at $277.38. So, nothing much to see here.
But in terms of news about the CSL business, there were some exciting headlines in FY23.
Image source: Getty Images
Vifor deal done
One of the big events for CSL in FY23 was the completion of its Vifor Pharma AG acquisition in late 2022. The deal cost CSL $16 billion but has opened up a whole new division for the company.
CSL Vifor specialises in the treatment of iron deficiency, dialysis, nephrology, and rare kidney disease.
In an investor briefing, CSL explained that iron deficiency has "significant global prevalence". It can lead to anaemia and major diseases such as chronic kidney disease (CKD), which is a "leading cause of mortality and morbidity around the world".
CSL said the size of the renal treatment market is predicted to grow from $13 billion in 2020 to $25 billion in 2026, which translates to a low double-digit compound annual growth rate (CAGR).
Vifor gave CSL a range of existing products to continue marketing, with more in the pipeline.
CSL is known for its huge commitment to research and development (R&D) and has a set policy of spending 10% to 11% of its annual revenue on R&D. In FY22, that was US$1.16 billion.
FDA approval on the world's most expensive medicine
A product that came out of CSL's pipeline after 10 years in development was the Hemgenix gene therapy to treat hemophilia B.
CSL received United States Food and Drug Administration (FDA) approval for Hemgenix in November.
This medicine is a big deal because it's the first and only one-time gene therapy for adult sufferers.
Its commercial launch in the US is expected in FY24. It's got an incredible reported price tag of US$3.5 million per dose, making it the world's most expensive drug.
Of course, this isn't what patients will pay. It's what health insurers and governments will pay in exchange for the greater cost savings the drug will deliver.
A 2021 study published in the Journal of Medical Economics found it cost the healthcare system more than US$20 million to treat a moderate to severe haemophilia B patient over their lifetime. So, US$3.5 million ain't nothin' in that context. It's a one-time treatment, so there are no ongoing costs.
It cost CSL more than $US1 billion to develop the drug. So, it only needs to sell 285 doses to break even!
What will FY24 bring for the CSL share price?
Hopefully, some real share price growth!
The good news is several top brokers are expecting decent share price movement for CSL in FY24.
Morgans believes CSL shares are "poised to break out this year".
The broker has an add rating and a $323 share price target for CSL.
Morgans says:
A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long-term forward multiple of ~30x.
Macquarie has an outperform rating on CSL shares with a $326 price target.
The most bullish of the bunch is Citi. It has a buy rating and a 12-month price target of $340. This implies a 27% potential upside on the stock.
This actually represents a cut in Citi's share price target following CSL's recent update, which revealed currency headwinds for the company, given it reports its earnings in US dollars.
Citi was previously tipping $350 per share by the end of FY24.
There is still the threat of a US recession in FY24, which of course, isn't good for US shares or ASX shares.
But Morgan Stanley points out that US healthcare stocks have outperformed the market by an average of 13% during the past four recessions.
Food for thought.
