In short: Brown Advisory (Global Value Select Strategy): a quality business finally on a value multiple. "CSL is a business we have admired as a peer to a past investment, but hadn't expected to find its way onto the kind of valuation we are willing to underwrite. However, a series of external headwinds and self-inflicted mistakes have allowed us to pay a low multiple to invest in what we suspect is one of the strongest biopharma businesses globally." The franchise: "the world's largest plasma-products business," one of three large flu-vaccine producers, plus Vifor in iron deficiency and nephrology — and the economics are structural, since CSL "generates the industry's most attractive economics because of a wider portfolio of proteins sold" from each donation. The three reasons for the discount are named: "a bad acquisition (Vifor), demand headwinds to certain plasma products, and negativity toward vaccination in the U.S. market."
CSL is the world's biggest plasma business: it collects blood plasma from donors and separates it into proteins sold as medicines for a range of serious conditions. It is also one of three large flu-vaccine makers and owns Vifor, which treats iron deficiency and kidney disease.
Brown Advisory's point is about price rather than quality. They had admired CSL for years without ever being able to buy it at a sensible valuation. Three things changed that: a badly judged acquisition (Vifor), weaker demand for certain plasma products, and growing hostility to vaccination in the United States.
The reason the underlying economics survive is subtle: because CSL sells more different proteins from each unit of donated plasma than its competitors, it earns more from the same raw material. That advantage is structural and does not go away because the share price has fallen.
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