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BlackRock’s Lyttleton opposes Woodford on pharm opportunity

BlackRock UK equity fund manager Mark Lyttleton disagrees with Invesco Perpetual income manager Neil Woodford’s view that pharmaceuticals represent a major opportunity in the market.

Speaking at the Fund Strategy Investment Summit in Austria last month, Woodford said that the pharmaceutical sector represents one of the best investment opportunities in his career.

Lyttleton, who manages the £600m UK, £1.5bn UK dynamic and £2.1bn UK absolute alpha portfolios, said if he was to place 100 per cent of his fund into defensives, he would much rather place it in the tobacco sector.

He said: “I feel a lot more comfortable with the story in tobacco as it has pricing power and a stable business and, of course, there is less patent and litigation risk. There are also less tax concerns.”

In an interview with Money Marketing, Woodford said the pharmaceutical sector, which accounts for around 25 per cent of his £7.9bn income and £10bn high-income funds, represents a similar opportunity to tobacco 25 years ago.

He added that he is likely to take the pharma weighting in his funds above 30 per cent.

Hargreaves Lansdown senior analyst Meera Patel says: “The share price on pharma stocks have not moved in a long time and whether they deserve to be that cheap is a tough call to make.”

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