Big pharma stocks gained impressively during the pandemic years for obvious reasons. However, with the pandemic in the rear-view mirror, the best pharmaceutical stocks continue to perform remarkably well. This is a welcome surprise, considering how the equities and other risky assets have taken a beating of late. Inflation, interest rate hikes and geopolitical tensions have weighed down market returns, but Big pharma seems to be an anomaly.
Regardless of the pandemic, the pharmaceutical industry will continue to be driven by secular tailwinds such as population aging and growth. Reports suggest that the market could grow at an 11.34% CAGR from 2021 to 2028. This will likely result in an incredibly bright future for pharmaceutical companies.
With that said, here are seven of the best pharmaceutical stocks worth investing in for the long haul.
Amgen (NASDAQ:AMGN) is a biotech giant that makes use of living cells in the development of biological medicines. AMGN stock has been one of the few companies that have outperformed the broader market despite the bearish enthusiasm at this time. Moreover, Amgen offers investors a healthy 3.1% yield and is slowly progressing toward dividend aristocrat status.
It recently reported its first-quarter results, which show a familiar story. Growth rates from its established drugs have been dropping, balanced by rising revenues from newer products. For instance, sales from its Neulasta drug decreased 28% from the prior-year period, while its newest cancer drug Lumakras earned a whopping $62 million, compared to nothing in the first quarter of last year.
Moreover, its foray into biosimilar drugs will pave the way for massive growth ahead. It already has three biosimilars in the advanced trial stage, while its rheumatoid arthritis drug, Amjevita, promises to deliver big in the coming years.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (NYSE:BMY) is one of the oldest pharmaceutical companies, having been in business for 164 years. It has brought some of the world’s most popular drugs to the market, but its business has suffered over the years due to patient expiries on several of its drugs.
However, in recent years it has acquired other companies in its niche to strengthen its pipeline and reduce its reliance on its existing drugs. Some major acquisitions in the past few years include the buy-out of Celgene and MyoKardia. Consequently, it has added several new blockbuster drugs, particularly catering to cancer, including Opdivo, Revlimid, Vidaza and Pomalyst. Pomalyst alone has contributed billions in sales since its approval in 2013. Therefore, with its savvy acquisitions, Bristol can continue to deliver incredible products to the market.
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) is a stalwart in the pharma space, offering some of the most popular drugs in four main areas, including diabetes/obesity, oncology, immunology and neuroscience. It has cemented its positioning in diabetes/obesity market, a sector that is poised for massive growth ahead. Nevertheless, it operates a highly diversified product portfolio, with minimal reliance on a single product.
Operating results have been highly encouraging over the years, delivering more than 6.8% revenue growth over the past five years. Moreover, its margin profile is what is most impressive, posting double-digit gains across multiple metrics.
The bulk of its sales are generated from its diabetes drugs, mainly from its core product, Trulicity, a market leader in the diabetes space. Moreover, it recently won Food and Drug Administration approval for its injectable type 2 diabetes cure called Mounjaro, which has also proven its effectiveness in weight-loss treatments. These treatments will continue to generate millions in sales for Eli for the next several years.
Viatris (NASDAQ:VTRS) is one of the top drug suppliers in the U.S. and Europe, specializing in branded, generic and biosimilar therapies. It made headlines after announcing the sale of its relatively small yet profitable biosimilars business. The transaction, though, has facilitated the process of deleveraging; thereby, de-risking the investment to a great extent. Moreover, with its massive cash flows ($1 billion during the first quarter), it recently paid off $840 million in debt. It planned to retire an additional $2 billion by the year’s conclusion. Additionally, it also raised its dividend by almost 10%.
The sale of its biosimilars business has come as a shock to most, which effectively leaves it with few growth drivers. Nevertheless, it now operates a much simpler portfolio, with strong cash flows and a well-covered dividend. Such a proposition is tough to pass up, especially with VTRS stock trading at just 0.7 times forward sales. Nevertheless, it’s not for the faint of heart.
ImmunityBio (NASDAQ:IBRX) is an up-and-coming healthcare company whose primary claim to fame is its potential drug for bladder cancer. It recently revealed that it filed for a biologics license application (BLA) for Anktiva and BCG, a combination drug used to treat unresponsive non-muscle invasive bladder cancer. With FDA approval, it stands to gain immensely and could kickstart its growth story.
Last October, results published on Anktiva and BCG showed a 72% remission rate. The combination has shown amazing results, outperforming the leading oncology agents. With its BLA submission, it has started the clock on FDA approval, which could lead its business toward bigger and better things.
Pfizer (NYSE:PFE) was in the thick of things during the pandemic, with its coronavirus vaccine that generated billions in revenue for the company. Consequently, its shares soared to new heights but have taken quite the beating of late. Investors are concerned over the long-term prospects of its coronavirus vaccine. It expects to generate $54 billion in revenues from its coronavirus pill and vaccine this year, which is more than 50% of the total expected in 2022.
Pfizer realizes its dependency on its Covid-19 vaccine, which is why it has invested heavily in acquiring new companies and advancing its product pipeline. It has acquired companies such as Biohaven, ReViral and Arena pharmaceuticals in the past year. Moreover, with its cash war chest, it will continue to pick up new companies. Additionally, its coronavirus vaccine sales don’t fade anytime soon, with the need for booster shots and children between the ages of six months to four years eligible for a shot.
Gilead Sciences (GILD)
Gilead Sciences (NASDAQ:GILD) is a big name in the biopharma space, achieving many medical breakthroughs since its inception. Its pipeline of treatments cover life-threatening diseases such as cancer, HIV and hepatitis. Over the trailing 12 months, the company has generated over $27 billion in total revenue with a 40.50% EBIT margin.
Its first-quarter results have shown strength across its portfolio of HIV and oncology offerings. Revenues during the quarter came in $6.6 billion, representing a 3% increase from the prior-year period. Moreover, its HIV drug called Biktarvy has seen an 18% bump in sales, while oncology sales increased by 60% from the same period last year. Looking ahead, the business should continue firing despite the inflationary pressures due to its pricing power.