Pharmaceutical Companies Stocks To Buy
The global pharmaceutical industry will generate about $1.16 trillion in sales in 2023, according to market research firm Statista, which expects 5.4% annual revenue growth through 2027. Oncology drugs alone should generate $202 billion in sales this year. Not only are pharmaceutical stocks excellent defensive investments in an uncertain economy, but some of them pay sizable dividends that can be a source of steady income and help offset the impact of inflation.
pharmaceutical companies stocks to buy
AstraZeneca was formed by the 1999 merger of Zeneca Group and Astra and is one of the largest pure-play pharmaceutical stocks. Analyst Damien Conover says the company's total sales were up an impressive 17% in the fourth quarter, excluding its COVID-19 vaccine. Conover says sales of cancer drugs Tagrisso, Imfinzi, Lynparza and Calquence will slow in the next few years as their markets become deeply penetrated. However, he is bullish on AstraZeneca's late-stage pipeline, including breast cancer drugs camizestrant and capivasertib, and lung cancer drug Dato-DXd. Morningstar has a "buy" rating and $74 fair value estimate for AZN stock, which closed at $68.60 on March 28.
Novartis is an international health care company that produces brand-name and generic pharmaceuticals. Its key products include Cosentyx for psoriasis, ankylosing spondylitis and psoriatic arthritis; Entresto for heart failure; Lucentis for wet age-related macular degeneration, or AMD; and Gilenya for multiple sclerosis. Conover says Novartis' pipeline opportunities position the company well to offset future patent losses. He says the next major patent loss looming is Entresto in 2026, but he is particularly bullish on iptacopan, which is in development for treating paroxysmal nocturnal hemoglobinuria, a rare blood disease, and other potential indications. Morningstar has a "buy" rating and $90 fair value estimate for NVS stock, which closed at $90.95 on March 28.
Sanofi is a French pharmaceutical company that specializes in atopic allergic disorders, oncology and rare diseases. Its leading drugs include diabetes treatment Lantus and Dupixent for treating atopic dermatitis, asthma and chronic rhinosinusitis with nasal polyps. Sanofi also recently announced a planned acquisition of Provention Bio, which would add Tzield to Sanofi's existing diabetes treatment portfolio. Conover says Tzield's $200,000 price and the massive Type 1 diabetes market create a major financial opportunity. He says Sanofi's branded drug lineup, promising pipeline and robust cash flow make the stock an excellent investment. Morningstar has a "buy" rating and $57 fair value estimate for SNY stock, which closed at $54.19 on March 28.
Gilead Sciences is a biopharmaceutical company that develops treatments for HIV/AIDS, hepatitis C, liver disease, hematology/oncology and inflammation. Its leading products are HIV drugs Biktarvy and Genvoya, and antiviral medication Veklury. Andersen says Genvoya and other COVID-19-related drug sales are likely to drop in 2023, but the market could prove to be more resilient than anticipated. She says Gilead's HIV drug profit margins are impressive, Biktarvy sales have exceeded expectations and the company is building a significant pipeline outside of HIV and hepatitis C. Morningstar has a "buy" rating and $97 fair value estimate for GILD stock, which closed at $80.97 on March 28.
Pfizer is one of the world's largest pharma companies and has a diversified portfolio of drugs for treating a variety of conditions. Its top drugs include COVID-19 vaccine Comirnaty, COVID-19 oral treatment Paxlovid and pneumococcal vaccine Prevnar. Conover says Pfizer's planned $43 billion acquisition of Seagen Inc. (SGEN) would help the company offset major upcoming patent losses in 2027 and 2028 from cardiovascular drug Eliquis, oncology drug Ibrance and breast cancer drug Vyndaqel. Conover estimates Seagen's cancer drugs will generate $8 billion in revenue by 2030. Morningstar has a "buy" rating and $48 fair value estimate for PFE stock, which closed at $39.99 on March 28.
GSK is one of the world's largest pharma companies. Leading products include Advair for asthma, Ventolin for bronchospasm, and Theraflu for cold and flu symptoms. Conover says investors are overly concerned about Zantac litigation and overlooking GSK's solid growth outlook. He says the company's HIV segment is well positioned to generate meaningful growth through at least 2027 before patents on older HIV drugs Tivicay and Triumeq start to expire. Conover also sees extended growth runaways for shingles vaccine Shingrix, respiratory treatment Trelegy and several other GSK specialty drugs. Morningstar has a "buy" rating and $50 fair value estimate for GSK stock, which closed at $35.10 on March 28.
Covid-19 vaccines have been good to pharmaceutical giant Pfizer (NYSE:PFE). In fact, those vaccines helped the company report better-than-expected third-quarter earnings and raise guidance for the year. For the quarter, the company posted an EPS of $1.78, as compared to the $1.39 expected by analysts. Revenues were up to $22.6 billion, as compared to expectations of $21 billion.
One of the oldest, and best pharma stocks on the market is Eli Lilly (NYSE:LLY). Founded by Civil War veteran, Col. Eli Lilly in May 1876, the company has become well known for its blockbuster drugs such as Prozac which is used to treat depression, as well as Cialis for erectile dysfunction. Those medications, and others, have powered Eli Lilly to annual sales of nearly $30 billion.
BNTX stock has come down 30% this year to trade at $160 a share. However, the stock remains up more than 1,000% in the past five years. And while sales of the Pfizer-BioNTech Covid-19 vaccine are starting to slow, the two companies are continuing to collaborate together, most notably on a new vaccine against influenza (flu) that utilizes messenger RNA (mRNA) technology that many industry observers see as the future of medicine.
New York City-based Bristol-Myers Squibb (NYSE:BMY) is another pharma stock that has ripped higher this year. So far in 2022, BMY stock has risen 30% to just over $80 a share. As with the other pharma companies listed here, Bristol-Myers Squibb has approved blockbuster drugs such as blood thinner Eliquis and the cancer drug Opdivo in its stable of products.
With a compound annual growth rate (CAGR) of 9.1%, the global pharmaceuticals industry is projected to expand to $1587.1 billion in 2022 from $1454.7 billion in 2021. In 2026, the pharmaceutical market is anticipated to reach $2135.2 billion at a CAGR of 7.7%. The industry is anticipating a strong growth outlook moving forward as thousands of drugs and therapeutics are in the later stages of research and near approval.
The US represents a 45% share of the global pharmaceutical market, and the Affordable Care Act (Obamacare) being upheld by the Supreme Court further enhances the sector's prospects for future expansion. The prevalence of chronic illnesses such as cancer and congestive heart failure is rising quickly on a global scale. The World Health Organization (WHO) estimates that some 133 million Americans, or 40% of the nation's population, are affected by such diseases as of 2022. This is anticipated to produce a sizable patient population with a variety of chronic illnesses, as well as individuals receiving therapy in long-term care facilities and at home. Additionally, the Rural Health Information Hub estimates that there are presently over 46 million adults in the US who are 65 years of age or older; that figure is projected to increase to approximately 90 million by 2050. During the projected period, these variables are presumably going to support the growth of the pharmaceutical industry in the United States.
The pharmaceutical industry is undergoing an evolution as new trends are shaping the industry. One of the major trends being followed by the best pharmaceutical stocks is the use of artificial intelligence (AI) to expedite the process of drug discovery and development. Another key trend is the emergence of precision medicine which is focused on specific patient diagnoses. Precision medicines ensure a higher level of effectiveness and lower the chance of adverse reactions. It must be noted that around 450 medications had to be withdrawn in the past 25 years due to adverse reactions, which is why precision medicine is expected to be a move in the right direction for the pharmaceutical industry. Furthermore, the demand for generic drugs and over-the-counter (OTC) medications is expected to rise as the population ages in many industrialized nations. Particularly, the long-term need for medications for chronic diseases will increase, presenting a growth opportunity for some of the best pharmaceutical stocks such as Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Cardinal Health, Inc. (NYSE:CAH).
To shortlist the best pharmaceutical stocks, we have analyzed their business fundamentals and growth prospects. These companies have strong drug pipelines and many therapeutics that are near the approval stage. The new drugs are expected to give a boost to these companies' financial strength and yield strong returns for investors in the long run. Furthermore, we have discussed the analysts' outlook on these stocks' growth outlook. The stocks have been ranked according to the number of hedge funds holding a stake in them as of Q2 2022.
The cannabinoid market is considered an expanding segment in the pharmaceutical industry. According to a report issued by Grand View Research, the size of the cannabinoids retail market is expected to rise to $26 billion by 2028. InMed Pharmaceuticals Inc. (NASDAQ:INM) is working on maintaining its position as one of the best pharmaceutical stocks in this segment.
InMed Pharmaceuticals Inc. (NASDAQ:INM) is bringing back its focus on the pharmaceutical side of the business and looking to lower its exposure in the health and wellness (H&W) segment. The company is anticipating the achievement of major milestones from the pharmaceutical business in the coming quarters and looking to complete the preclinical work on its glaucoma program next year before starting human trials in 2024. InMed Pharmaceuticals Inc. (NASDAQ:INM) is leading the Phase-II trial of the investigational drug INM-755 cannabinol (CBN) cream for treating patients suffering from epidermolysis bullosa (EB). The company is conducting Phase II trials across eight clinical trial facilities. 041b061a72