November 27, 2025 • 10 mins
Today's episode deals with a question from listener Michael, via LinkedIn:
What in the world has happened with CSL? Downgrading guidelines, some board member transitions, vaccine business segment demerger, and a huge drop in stock price!
Steve Wheen, Head of Healthcare, and Managing Director of Equity Research at Jarden, talks to Sean Aylmer about CSL and the rest of the healthcare sector.
This is general information only. Seek professional advice before making investment decisions.
Find out more: https://fearandgreed.com.au/
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Fearing Greed Q and A where we ask
and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. Today's question has come from Michael who
contacted us through LinkedIn. He says, I quote, what in
the world has happened with CSL downgrading guidelines, some board
member transitions, vaccine business segment de merger and a huge
(00:27):
drop in stock price? Plenty in that question. It is
a good question because seas Sol's share price is down
about thirty five percent in the last twelve months, and
that's after it had been rerated anyway or derated anyway.
So what's going on with a company that actually, within
the last five years I think was the biggest company
on the AX. To help us out, and please remember
(00:50):
this is general information only and you should always seek
advice before making investment decisions. I welcome Steve Ween, head
of Healthcare and managing director of Equity Research at jard
And Steve, welcome back to I Fear in Greed Q
and a.
Speaker 2 (01:03):
Thanks Sean, good to be here.
Speaker 1 (01:05):
Quite the intro that what is going on at c itself?
So maybe you can give us a bit of a
one A one since the rerating began.
Speaker 2 (01:12):
Okay, so there's a lot going on, as you correctly
point out, I guess the market has lost quite a
bit of confidence in the company, and that is sort
of multi dimensional. There has been a few exits, as
you pointed out, but I think it probably started to
(01:32):
some degree when one of their big R and D projects,
which was in the cardiac space, fell over, which was
I think in terms of how much they spent on
that particular R and D project was in excessive a
billion dollars, which then subsequently didn't quite meet its primary
endpoints in the phase three trial and so was disbanded.
(01:55):
So that was the start to a degree. They also
deployed capital to buy a company called V four V
four is. It was a step outside of their core competencies.
It was in the nephrology space, that's dialysis and the
drugs associated with dialysis. That has kind of not performed
(02:18):
up to expectations, and there's been a number of misses there. Certainly,
all the positive points that were outlined around that particular
acquisition really haven't come to fruition. It's not doing too
badly now. It's sort of found a fairly stable base
after declining for some point. There's a bit of a
concern around a generic that's going to emerge in the
(02:40):
US in twenty six but they seem to have done
pretty good job of staving off a generic in Europe,
so that was the next kind of impact, and then
probably fast track to sort of more recently. We saw
a big downgrade in terms of their outlook for the
company in August at their full year twenty five result,
(03:01):
and then no sooner than two months later we got
another one. So maybe that's a good place to start
to sort of delve down as to what the latest
downgrade is.
Speaker 1 (03:13):
Yeah, so just explain why we did have those down grades,
how the plasma business is going. But then presumably after
all this it's a lot cheaper than it was before.
Speaker 2 (03:24):
Yeah, sure, I think probably the better place to start
to explain it. And there's obviously a lot in every result,
given how big this company is, but quite simply the
most recent downgrade, which came two months after there was
two quite dramatic deteriorations that weren't anticipated at the time
(03:45):
of the result in August, and this is when they
set the outlook for the FI twenty six years, and
those were a massive deterioration in the injection rate or
the forward bookings for flu vaccines. And the second one
was a drying up of demand for albumen in China.
(04:10):
So both of those collectively okay. So albumen is one
of the key products that's made out of plasma and
it's quite often used in China on label. It would
be used for it's a bit of a blood volumeizer,
so anyone that's got in shock, had major burns, they
(04:31):
get administered with albumen. But it also gets used in
China for sort of more recreational is not the right word,
but it's used by the elderly as a bit of
a tonic to make them feel better, and so it
has quite a huge popularity within the Chinese market. Roughly
sixty percent of CSL's albumen is sold into China. And
(04:55):
what happened there was the Chinese government suddenly said, well,
we're not happy paying for that anymore, and we are
going to restrict that and only restricted to on label use,
and that saw a reduction of about one hundred and
fifty million dollars in sales. I mentioned earlier the flu impact.
So the flu impact was just we've seen a lot
(05:17):
of vaccine hesitancy in the US, particularly RFK Junior is
doing a fabulous job talking everyone out of vaccines and
aligning it with crazy suggestions that it causes ADHD, causes autism,
or manner of completely unfounded accusations around it. But it
(05:40):
seems to be resonating to some degree that people are
just sort of bypassing their annual flu injections. So they
were the two big sort of surprises that we weren't
We knew the flu was weak, but we didn't know
it was this week. We had no idea about this
kind of albument sort of demand drying up.
Speaker 1 (06:02):
What's interesting is the four reasons you've given that China
and US demand I was going to say cyclical kind
of government decisions VFA. It was probably just maybe that
didn't go off as well as he thought. The R
and D spend, well, you know, every company has to
have to spend R and D, particularly when you're a
healthcare co. I suppose how much of this is a
(06:23):
management issue or is it how much of it is
that CSLS has just found itself in this situation, which
is slightly unfortunate.
Speaker 2 (06:30):
Yeah, I mean, there is definitely an element of this,
which is completely out of their control. One we haven't
talked about is the US government or Trump putting in tariffs.
I mean the supply chain from CSL in terms of
the way they collect plasma and then ultimately fractionate It
is done across a whole range of manufacturing plants spread
(06:51):
right around the world. It starts off in the US,
it gets sent to Marlburg in January, then it gets
to burn in Switzerland, and then it gets sent back
to the US. That's kind of the rough sort of
manufacturing flow. And now there's a risk that that gets
a tariff when it comes back into the US. So
that's another thing that again is to your point, is
(07:12):
government led which was completely unforeseeable, you know, twelve months
ago prior to the introduction of that tariff, and now
it hasn't come in, and it looks like they're going
to get an exemption, but that's not stopping the market
from starting to price that risk into the stock as well.
So in terms of the R and D side of things,
(07:34):
that is the government that is sorry. That is not
a government related issue. That's I mean, the company themselves
have kind of indicated they're not happy with the R
and D spend or the discipline around the allocation of
capital there, and they're going to correct that, starting with
reducing the number of R and D sites around the
(07:55):
world and also reducing the number of staff and opting
now not develop as much in house, but to pick
up attractive ip that they find or along the way,
which is a bit of a shift, because an internally
developed R and D project is far more profitable than
one that you're buying that's sort of partially developed.
Speaker 1 (08:16):
Yeah, okay, so from an investor's viewpoint, CSL's valuation must
be a lot cheaper than it was a few years
back when there's momentum against the stock like CSL is
it hard to buy? I mean we again we rush
to say that if you are investing, get your own
advice on this. But is it hard to buy? Says
(08:37):
that when nothing seems to be going right.
Speaker 2 (08:40):
It is and the sentiment is against it. I mean,
I'm actually positive on it. I think there's been an
overreaction to all of these things, and they're not unjustifiable
over reactions, like when you see the company reduce their
expectations for FI twenty seven and FI twenty eight, which
were sort of two months ago much higher than where
(09:02):
they are now. You lose confidence that what we're hearing
and seeing is perhaps not playing out as well as
in their minds, and they obviously get a better insight.
So it's leading to some conspiracy theories. There are conspiracy
theories everywhere on this stock at the moment, which is
kind of like the darkest before Dawn type scenario which
(09:23):
I think we're in. But what do we need to
see for the stock to actually re rate from here?
We need to see it in the numbers. No one
will believe it now until it's in the numbers. And unfortunately,
first half twenty six, which we will see in February,
is not the half that's going to placate everybody. Now
(09:44):
everyone knows it's going to be weak. There are you know,
Flues Week, our Women's Week. As I said, that's all
playing into this first half. There was a reimbursement change
in the US which also plays into this half, and
there was a loss of a contract in ig the
NHS in the UK which plays into this half. Now
second half is a bit of a different story, but
(10:05):
you know it's probably you know, I can see the
market or the investors that I speak to, indicating that, well,
my reader, is that they are deferring that decision to
go significantly overweight till they get that result behind them.
Speaker 1 (10:21):
Steve, thanks for talking to Fear and Greed.
Speaker 2 (10:23):
Thanks very much, Sean.
Speaker 1 (10:24):
That was Steve Ween, head of Healthcare and Managing director
of Equity Research at Jarden. And a reminder to please
seek professional advice before making investment decisions. If you've got
something you'd like to know, then send it through your question,
just as listener Michael did via LinkedIn, Instagram, Facebook, or
at fearangreed dot com. Today you I'm shying on Matt
and this is Fear and Greed Q and a
Welcome to Fearing Greed Q and A where we ask
and answer questions about business, investing, economics, politics and more.
I'm Sean Aylmer. Today's question has come from Michael who
contacted us through LinkedIn. He says, I quote, what in
the world has happened with CSL downgrading guidelines, some board
member transitions, vaccine business segment de merger and a huge
(00:27):
drop in stock price? Plenty in that question. It is
a good question because seas Sol's share price is down
about thirty five percent in the last twelve months, and
that's after it had been rerated anyway or derated anyway.
So what's going on with a company that actually, within
the last five years I think was the biggest company
on the AX. To help us out, and please remember
(00:50):
this is general information only and you should always seek
advice before making investment decisions. I welcome Steve Ween, head
of Healthcare and managing director of Equity Research at jard
And Steve, welcome back to I Fear in Greed Q
and a.
Speaker 2 (01:03):
Thanks Sean, good to be here.
Speaker 1 (01:05):
Quite the intro that what is going on at c itself?
So maybe you can give us a bit of a
one A one since the rerating began.
Speaker 2 (01:12):
Okay, so there's a lot going on, as you correctly
point out, I guess the market has lost quite a
bit of confidence in the company, and that is sort
of multi dimensional. There has been a few exits, as
you pointed out, but I think it probably started to
(01:32):
some degree when one of their big R and D projects,
which was in the cardiac space, fell over, which was
I think in terms of how much they spent on
that particular R and D project was in excessive a
billion dollars, which then subsequently didn't quite meet its primary
endpoints in the phase three trial and so was disbanded.
(01:55):
So that was the start to a degree. They also
deployed capital to buy a company called V four V
four is. It was a step outside of their core competencies.
It was in the nephrology space, that's dialysis and the
drugs associated with dialysis. That has kind of not performed
(02:18):
up to expectations, and there's been a number of misses there. Certainly,
all the positive points that were outlined around that particular
acquisition really haven't come to fruition. It's not doing too
badly now. It's sort of found a fairly stable base
after declining for some point. There's a bit of a
concern around a generic that's going to emerge in the
(02:40):
US in twenty six but they seem to have done
pretty good job of staving off a generic in Europe,
so that was the next kind of impact, and then
probably fast track to sort of more recently. We saw
a big downgrade in terms of their outlook for the
company in August at their full year twenty five result,
(03:01):
and then no sooner than two months later we got
another one. So maybe that's a good place to start
to sort of delve down as to what the latest
downgrade is.
Speaker 1 (03:13):
Yeah, so just explain why we did have those down grades,
how the plasma business is going. But then presumably after
all this it's a lot cheaper than it was before.
Speaker 2 (03:24):
Yeah, sure, I think probably the better place to start
to explain it. And there's obviously a lot in every result,
given how big this company is, but quite simply the
most recent downgrade, which came two months after there was
two quite dramatic deteriorations that weren't anticipated at the time
(03:45):
of the result in August, and this is when they
set the outlook for the FI twenty six years, and
those were a massive deterioration in the injection rate or
the forward bookings for flu vaccines. And the second one
was a drying up of demand for albumen in China.
(04:10):
So both of those collectively okay. So albumen is one
of the key products that's made out of plasma and
it's quite often used in China on label. It would
be used for it's a bit of a blood volumeizer,
so anyone that's got in shock, had major burns, they
(04:31):
get administered with albumen. But it also gets used in
China for sort of more recreational is not the right word,
but it's used by the elderly as a bit of
a tonic to make them feel better, and so it
has quite a huge popularity within the Chinese market. Roughly
sixty percent of CSL's albumen is sold into China. And
(04:55):
what happened there was the Chinese government suddenly said, well,
we're not happy paying for that anymore, and we are
going to restrict that and only restricted to on label use,
and that saw a reduction of about one hundred and
fifty million dollars in sales. I mentioned earlier the flu impact.
So the flu impact was just we've seen a lot
(05:17):
of vaccine hesitancy in the US, particularly RFK Junior is
doing a fabulous job talking everyone out of vaccines and
aligning it with crazy suggestions that it causes ADHD, causes autism,
or manner of completely unfounded accusations around it. But it
(05:40):
seems to be resonating to some degree that people are
just sort of bypassing their annual flu injections. So they
were the two big sort of surprises that we weren't
We knew the flu was weak, but we didn't know
it was this week. We had no idea about this
kind of albument sort of demand drying up.
Speaker 1 (06:02):
What's interesting is the four reasons you've given that China
and US demand I was going to say cyclical kind
of government decisions VFA. It was probably just maybe that
didn't go off as well as he thought. The R
and D spend, well, you know, every company has to
have to spend R and D, particularly when you're a
healthcare co. I suppose how much of this is a
(06:23):
management issue or is it how much of it is
that CSLS has just found itself in this situation, which
is slightly unfortunate.
Speaker 2 (06:30):
Yeah, I mean, there is definitely an element of this,
which is completely out of their control. One we haven't
talked about is the US government or Trump putting in tariffs.
I mean the supply chain from CSL in terms of
the way they collect plasma and then ultimately fractionate It
is done across a whole range of manufacturing plants spread
(06:51):
right around the world. It starts off in the US,
it gets sent to Marlburg in January, then it gets
to burn in Switzerland, and then it gets sent back
to the US. That's kind of the rough sort of
manufacturing flow. And now there's a risk that that gets
a tariff when it comes back into the US. So
that's another thing that again is to your point, is
(07:12):
government led which was completely unforeseeable, you know, twelve months
ago prior to the introduction of that tariff, and now
it hasn't come in, and it looks like they're going
to get an exemption, but that's not stopping the market
from starting to price that risk into the stock as well.
So in terms of the R and D side of things,
(07:34):
that is the government that is sorry. That is not
a government related issue. That's I mean, the company themselves
have kind of indicated they're not happy with the R
and D spend or the discipline around the allocation of
capital there, and they're going to correct that, starting with
reducing the number of R and D sites around the
(07:55):
world and also reducing the number of staff and opting
now not develop as much in house, but to pick
up attractive ip that they find or along the way,
which is a bit of a shift, because an internally
developed R and D project is far more profitable than
one that you're buying that's sort of partially developed.
Speaker 1 (08:16):
Yeah, okay, so from an investor's viewpoint, CSL's valuation must
be a lot cheaper than it was a few years
back when there's momentum against the stock like CSL is
it hard to buy? I mean we again we rush
to say that if you are investing, get your own
advice on this. But is it hard to buy? Says
(08:37):
that when nothing seems to be going right.
Speaker 2 (08:40):
It is and the sentiment is against it. I mean,
I'm actually positive on it. I think there's been an
overreaction to all of these things, and they're not unjustifiable
over reactions, like when you see the company reduce their
expectations for FI twenty seven and FI twenty eight, which
were sort of two months ago much higher than where
(09:02):
they are now. You lose confidence that what we're hearing
and seeing is perhaps not playing out as well as
in their minds, and they obviously get a better insight.
So it's leading to some conspiracy theories. There are conspiracy
theories everywhere on this stock at the moment, which is
kind of like the darkest before Dawn type scenario which
(09:23):
I think we're in. But what do we need to
see for the stock to actually re rate from here?
We need to see it in the numbers. No one
will believe it now until it's in the numbers. And unfortunately,
first half twenty six, which we will see in February,
is not the half that's going to placate everybody. Now
(09:44):
everyone knows it's going to be weak. There are you know,
Flues Week, our Women's Week. As I said, that's all
playing into this first half. There was a reimbursement change
in the US which also plays into this half, and
there was a loss of a contract in ig the
NHS in the UK which plays into this half. Now
second half is a bit of a different story, but
(10:05):
you know it's probably you know, I can see the
market or the investors that I speak to, indicating that, well,
my reader, is that they are deferring that decision to
go significantly overweight till they get that result behind them.
Speaker 1 (10:21):
Steve, thanks for talking to Fear and Greed.
Speaker 2 (10:23):
Thanks very much, Sean.
Speaker 1 (10:24):
That was Steve Ween, head of Healthcare and Managing director
of Equity Research at Jarden. And a reminder to please
seek professional advice before making investment decisions. If you've got
something you'd like to know, then send it through your question,
just as listener Michael did via LinkedIn, Instagram, Facebook, or
at fearangreed dot com. Today you I'm shying on Matt
and this is Fear and Greed Q and a
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