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Sector Snap: Specialty drugs in 2012

Analyst says shares of specialty drugmakers like Salix and Cubist should do well in 2012

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NEW YORK (AP) — A Caris & Co. analyst said Friday that he expects specialty drugmakers including Salix Pharmaceuticals and Cubist Pharmaceuticals to do well in 2012.

Companies will meet with investors and analysts next week at The JPMorgan Chase health care conference in San Francisco. Analyst Mario Corso said Salix Pharmaceuticals Inc. has the best chance of surpassing Wall Street expectations, while Cubist Pharmaceuticals Inc. has one of the least risky revenue streams. He said those companies were among his top picks in the sector, along with Alkermes PLC, Questcor Pharmaceuticals Inc.

Among smaller-cap stocks, Corso said he favors Ironwood Pharmaceuticals Inc. and Emergent BioSolutions Inc., and he singled out Forest Laboratories Inc. as a larger-cap stock that should do well in 2012.

Salix makes Xifaxan, which treats traveler's diarrhea and neurological problems associated with liver failure, and Relistor, which is used as a treatment for opioid-induced constipation. Analysts expect the Raleigh, N.C., company to report a profit of $2.65 per share this year, on $722.8 million in revenue.

Cubist gets most of its revenue from the antibiotic Cubicin, which is used to treat severe skin and bloodstream infections. It also markets Dificid, a treatment for clostridium difficile infection. Cubist acquired Adolor Corp. in December and now sells Entereg, which treats constipation in patients being treated with opioid pain drugs.

Corso rated Salix, Cubist, Alkermes, Questcor, Emergent, and Ironwood shares "Buy" and Forest shares at "Above Average."

Shares of Salix rose 47 cents to close at $47.87, while Cubist stock rose 43 cents to $40.17. Shares of Alkermes lost 30 cents to $16.68, Questcor stock fell 25 cents to $38.95, and Ironwood shares sank $1.20, or 10 percent, to $10.78.

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