Over the course of the past year and a half, investors have been more focused on adding pharmaceutical stocks to bolster their portfolios. This comes as several large-cap pharma stocks have dominated the news as they raced to develop an effective vaccine for COVID-19.
Big-name pharmaceutical companies, including Pfizer (NYSE: PFE), Moderna (NASDAQ: MRNA), and Johnson & Johnson (NYSE: JNJ) that successfully developed a vaccine, have now become household names if they weren’t already.
Besides the COVID-19 vaccine, there are some pretty incredible innovations happening in the pharmaceutical industry. These stocks have the possibility of generating substantial earnings for shareholders. Let’s take a look at some of the best pharmaceutical stocks to add to your portfolio right now.
Best Pharmaceutical Stocks for Your Portfolio
Pharmaceuticals and prescription drugs are becoming more of an integral part of society than ever before. Baby boomers make up an estimated 73 million citizens that will be over the age of 65 by 2030. Because of this, the pharmaceutical industry is preparing for a major transition.
New pharma companies are being created all the time to meet the increasing needs of society. However, there are a few pharma stocks that have consistently delivered value for shareholders. These include:
- AbbVie (NYSE: ABBV)
- Regeneron Pharmaceuticals (NASDAQ: REGN)
- Eli Lilly (NYSE: LLY)
- Pfizer (NYSE: PFE)
Let’s review what makes these pharmaceutical stocks unique and discover what excites investors about the future of the pharmaceutical industry.
- Market Cap: 210B
- 2020 Revenue: $45.78B
- Revenue Growth: 37.6%
AbbVie has been one of the most exciting companies to watch grow and expand their product pipeline. The company has one of the most successful prescription drugs of all time in HUMIRA. Used to treat rheumatoid arthritis and plaque psoriasis, HUMIRA is now the number one immunology drug. HUMIRA alone generated nearly 20 billion in revenue in 2020, with 8.4% growth in the U.S.
However, internationally the drug has experienced a different story. Increased competition has driven drug sales lower, decreasing nearly 13% in 2020 and another 6% in Q2 of 2021.
The good news for ABBV investors is the company’s new product pipeline is starting to generate additional revenue. AbbVie CEO, Richard A. Gonzalez recently mentioned in the company’s Q2 financial results, “AbbVie’s new immunology assets contributed more than $1 billion in sales” in the second quarter.
Investors looking for dividend stocks should be happy to note that AbbVie is part of the Dividends Aristocrats Index. An exclusive list of companies that have increased their dividend each year for at least 25 years.
Since the company was spun off from Abbott Laboratories (NYSE: ABT) in 2013, it has increased its dividend by 225%. And if that isn’t enough, Warren Buffett’s Berkshire Hathaway owns over $2.3 billion worth of the HUMIRA maker.
- Market Cap: 71B
- 2020 Revenue: $8.5B
- Revenue Growth: 8.1%
Regeneron is another pharmaceutical stock that’s worth keeping an eye on with impressive growth over the past few years and a solid pipeline of drugs.
EYLEA is the company’s largest drug in terms of sales, with 1.45 billion units sold in the second quarter. The company’s antibody cocktail, REGEN-COV, was just expanded for emergency use by the U.S Food and Drug Administration. The new approval allows more people who are considered “at-risk” to use the product.
Compared to some of its peers, Regeneron’s 8% revenue growth may not seem like much. But, in the company’s latest Q2 Financial filings, the pharmaceutical maker reported a much different result. Total revenue grew to $5.14 billion, climbing 163% from the previous year. Net income also increased significantly, jumping 245% to 3.10 billion.
- Market Cap: 259.1B
- 2020 Revenue: $24.5B
- Revenue Growth: 10%
Eli Lily was also in the COVID-19 vaccine race until the FDA revoked the emergency use of the company’s therapy dug, Bamlanivimab.
The disappointing news hasn’t spooked investors as this pharmaceutical stock is still up over 65% year to date. Compared to only 16% growth on the NYSE Arca Pharmaceutical Index, Eli Lily is showing higher demand among investors than its competitors.
Some of Eli Lily’s most commonly prescribed medicines include Trulicity for diabetes, Humalog for diabetes, Alimta for cancer, Forteo for osteoporosis, Cialis for men’s health, and Jardiance for diabetes.
In the second quarter, the drug maker grew its revenue by 23% to $6.7 billion. This includes 12% growth, excluding the company’s Covid-19 antibody treatment.
The revenue growth can be primarily attributed to higher product sales of the company’s key products – Jardiance, Cyramza, Trulicity, etc. The increasing product sales are a good sign for LLY investors, showing their products are in higher demand worldwide.
Growing sales will be a key driver in sustaining the LLY stock run for long-term potential.
- Market Cap: 274.1B
- 2020 Revenue: $41.9B
- Revenue Growth: (-19)%
Pfizer is a potent pharmaceutical stock to buy in 2021, with PFE shares up over 35% this year. Pfizer is a household name now after its Covid vaccine with BioNTech (NASDAQ: BNTX) grabbed national headlines. After a new white house briefing outlines the use of booster shots and a resurgence of Covid variants, PFE stock is fresh on investors’ minds again.
The pharmaceutical maker had a strong second-quarter earnings report with 92% revenue growth from the previous year. Pfizer was quick to raise their guidance for the year, noting higher expected revenues and earnings per share.
Other than the vaccine, Pfizer also sports a hefty product lineup with sales of Vyndaqel growing 81%, Eliquis up 13%, and Prevnar-13 up another 34% in the quarter.
Adding Pharmaceutical Stocks to Your Portfolio
As you can see, the world around us needs pharmaceuticals to survive and function on a “normal” basis. These pharmaceutical stocks are changing the world we live in, making it safer for everyone. Also, the demand for these prescription drugs is growing. The pharmaceutical industry continues to develop new technology to improve the developmental process. This will result in lower costs for everyone.
As the boomers age, now might be a good time for investors to purchase pharmaceutical stocks. If anything, recent years have shown society’s continued reliance on pharmaceuticals. These are just some of the companies investors should monitor to take advantage of the coming boom.
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About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.