CSL Limited (ASX: CSL) is a real standout among Australia's listed healthcare companies.
I find the products both mind-boggling and awe inspiring for their ability to save lives. The products may be complex and very specialised, but it's important to understand how they contribute to the company's core revenue streams before investing.
How does CSL Limited make money?
CSL Limited's revenues can be sorted into five product categories:
Source: CSL Limied 2015 Annual report. Chart: Author
Immunoglobulins (41%)
These are antibodies used by the immune system to protect us against illness. CSL's products, including Hizentra, are used to treat and prevent infections and to treat autoimmune diseases.
People often need these products if they are born without the immunities and antibodies they need, known as Primary immunodeficiency. According to research in the Journal of Molecular Diagnostics, this impacts 1-in-500 people in the U.S.
Other/specialty products (27%)
This includes products like Kcentra, which helps blood clotting for patients that need urgent surgery but are taking the blood thinner Warfarin, which prevents blood clots.
Another example is Berinert, which treats the rare Hereditary Angioedema condition. This is the lack of a certain blood protein which can cause painful and dangerous swelling.
Albumin (14%)
Albumin is the most common type of protein found in our blood plasma and its role is to stabilise blood pressure. CSL's Albumin products help to restore blood volume and pressure in patients after trauma or surgery. It is also used for treating burns.
Plasma-derived coagulants (10%)
These products help blood clotting and include products to treat Haemophilia A, B and other acute bleeding disorders.
Helixate (8%)
This controls and prevents bleeding in both adults and children with haemophilia A.
Foolish takeaway
The products CSL produces are well regarded and, supported by patents and trademarks, can offer a significant competitive advantage.
On top of that CSL's financial position is fantastic, allowing year after year of growth and high compounding returns for shareholders, making it one of very few companies I would be willing to pay a premium price to own.
