The pharmaceutical industry is set to grow in the coming years thanks to an aging population, chronic diseases, and new technologies. In this article, we’ll look at the fundamentals of three pharma stocks, Sanofi (SNY), Johnson & Johnson (JNJ) and AstraZeneca PLC (AZN), which can boost your portfolios.
Before diving deeper into the fundamentals of these stocks, let’s discuss why the industry is well-positioned for growth.
According to U.S. pharmaceutical industry statistics, the United States is projected to hold a 43.7% market share in the global pharmaceutical industry in 2023. Additionally, the U.S. is anticipated to spend between $605 billion to $635 billion on medicines by 2025.
Increased healthcare spending and a strong demand for generic medications drive the global generic drugs market. Additionally, the market benefits from numerous patent-expired branded drugs and innovative product introductions through strategies like licensing agreements and partnerships in the pharmaceutical industry.
The global generic drug market is expected to grow at a CAGR of 5.1% to reach $613.34 billion by 2030.
Moreover, increased demand for personalized medicine and targeted therapy is boosting the industry. According to Statista, worldwide pharmaceutical revenues are expected to grow at a CAGR of 5.4% to reach $1.44 trillion by 2027.
Considering these conducive trends, let’s take a look at the fundamentals of the three above-mentioned Medical – Pharmaceuticals stocks, with the third stock.
Stock #3: Sanofi (SNY)
Headquartered in Paris, France, SNY is engaged in the research, development, manufacture, and marketing of therapeutic solutions globally. The company operates through three broad segments: Pharmaceuticals; Vaccines; and Consumer Healthcare.
On October 4, SNY and Teva Pharmaceuticals Industries Ltd. (TEVA) announced a collaboration to co-develop and co-commercialize TEV ‘574, a drug currently in Phase 2b clinical trials for the treatment of Ulcerative Colitis and Crohn’s Disease, both inflammatory bowel diseases.
SNY’s CEO expressed optimism about TEV ‘574’s potential as a best-in-class option for gastrointestinal diseases, strengthening their commitment to innovative treatments.
On September 14, SNY and First Wave BioPharma, a clinical-stage biopharmaceutical company specializing in GI disease therapies, entered into an agreement to license SNY’s Capeserod, a selective 5-HT4 receptor partial agonist, for repurposing and development in GI indications. The agreement involves upfront payment, milestone payments, and royalties, with SNY having a right of first refusal for reacquisition and commercialization.
During the fiscal second quarter that ended June 30, 2023, SNY’s net sales amounted to €9.97 billion ($10.55 billion). Its operating income increased 29.8% year-over-year to €1.86 billion ($1.97 billion). The company’s net income and EPS grew 18.6% and 22.3% from its previous-year quarter to €1.45 billion ($1.53 billion) and €1.15 per share, respectively.
Street expects SNY’s EPS and revenue to increase 24.2% and 2.1% year-over-year to $5.56 and $47.38 billion for the fiscal year 2023. The company surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 28.6% to close the last trading session at $53.09. It soared 9.6% year-to-date.
SNY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SNY also has an A grade for Stability and a B for Value. It is ranked #16 in the 156-stock Medical – Pharmaceuticals industry.
Click here for SNY’s additional Growth, Momentum, Sentiment and Quality ratings.
Stock #2: Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. It operates in three segments: Consumer Health Segment, Pharmaceutical Segment, and MedTech Segment.
On September 14, 2023, JNJ announced that it is rebranding and refocusing on healthcare innovation, uniting its segments and emphasizing pharmaceutical and medtech solutions to address complex health challenges. This strategic shift aims to enhance the JNJ’s reputation and global impact in healthcare.
JNJ’s sales for the third quarter ended October 17, 2023, increased 6.8% year-over-year to $21.35 billion. Its gross profit increased 6.7% year-over-year to $14.75 billion. The company’s adjusted net earnings rose 14.1% year-over-year to $6.78 billion. In addition, its adjusted EPS came in at $2.66, representing an 19.3% increase year-over-year.
Street expects JNJ’s EPS for the quarter ending December 31, 2023, to increase 4.9% year-over-year to $2.46. It surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock gained marginally intraday to close the last trading session at $151.57.
JNJ’s POWR Ratings reflect strength. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Stability and Quality. It is ranked #10 in the same industry. To see JNJ’s Growth, Value, Momentum and Sentiment ratings, click here.
Stock #1: AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN is a renowned biopharmaceutical company that focuses on discovering, developing, manufacturing, and commercializing prescription medicines. Its marketed products treat oncology, COVID-19, respiratory, cardiovascular, renal, and metabolism diseases.
On October 18, AZN announced that Soliris (eculizumab) had been approved in China for the treatment of adult patients with neuromyelitis optica spectrum disorder (NMOSD) who are anti-aquaporin-4 (AQP4) antibody positive (Ab+). This approval could bolster the company’s footprint in the country.
On September 20, AZN declared that its rare disease group Alexion, AstraZeneca Rare Disease, had completed a definitive purchase and license agreement to buy a portfolio of preclinical rare disease gene therapy programmes and enabling technologies from Pfizer Inc. (PFE). This should add to AZN’s revenue stream.
AZN’s total revenues increased 6% year-over-year to $11.42 billion for the second quarter (ended June 30, 2023), while its operating profit grew 355.7% from the year-ago value to $2.46 billion. The company’s profit after tax and EPS increased 405.6% and 408.7% from the prior-year quarter to $1.82 billion and $1.17, respectively.
Street expects AZN’s revenue to increase 3.2% year-over-year to $45.76 billion for the current fiscal year (ending December 2023). Its EPS is expected to grow 10.4% from the prior year to $3.68 for the same period. It surpassed the consensus EPS estimates in each of the four tailing quarters, which is impressive.
Over the past year, the stock has gained 14.9% to close the last trading session at $64.21.
AZN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It is ranked #3 in the same industry. It has an A grade for Growth and a B for Value, Stability and Quality. To see additional AZN’s ratings for Momentum, and Sentiment, click here.
What To Do Next?
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JNJ shares were trading at $150.62 per share on Thursday morning, down $0.95 (-0.63%). Year-to-date, JNJ has declined -12.85%, versus a 9.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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