The Tobacco Industry

Ade Roberts, CFA 
April 2014 
The global tobacco industry, which generated aggregate revenues in excess of US$770 billion in 2012, is a tale of two markets. In developed markets, industry volumes are in decline because of tax increases, tightening regulations, demographic changes, and a propensity to trade down to lower-cost products due to limited disposable income growth. In contrast, in emerging markets in Asia, the Middle East, and Africa, aggregate consumption is on the rise because of population growth and economic development. In this comprehensive examination of the industry, the author provides an overview of key consumption drivers, new product development initiatives, and the regulatory and legal landscape, as well as practical guidance for effective analysis of publicly traded tobacco companies.

The Pharmaceutical Industry

Marietta Miemietz, CFA 
November 2013 
Among the most distinctive features of the pharmaceutical industry are the complexity and length of the product development cycle and the independence of a pharmaceutical company’s operating performance from overall industry trends. The earnings outlook of an individual company is determined, first and foremost, by the products it develops and markets. Consequently, the industry is characterized by exceptional heterogeneity, which notably complicates peer group analyses and often entails divergent share price performance. Top-down analytical approaches based on overall market growth rates and market share development, often a good starting point in other industries, add limited value at best and may often be misleading. The quality of bottom-up analyses that take into account the clinical utility, cost-effectiveness, competitive landscape, intellectual property, and economics of individual drugs is typically the main success factor in selecting pharmaceutical and biotechnology stocks. In this comprehensive examination of the industry, the author delineates the determinants of success in drug development and marketing and then reviews portfolio considerations and the implications for financial statement analysis, forecasting, and valuation.

The Machinery Industry

Anthony M. Fiore, CFA 
September 2013 
The global machinery industry is composed of a diverse array of end markets and products, including construction and earth-moving equipment, farm machinery, heavy duty trucks, pumps, valves, motors, compressors, hydraulics, filtration, industrial controls, and automation systems—as well as machine tools for cutting, stamping, and forming metal. In this comprehensive examination of the industry, the author gives an overview of its structure and primary economic drivers and provides practical guidance for effective analysis of the industry’s most prominent companies.

Original：CFA Institute Industry Guides