Top 3 Pharma Innovators to Watch Closely

A growing global aging population and the prevalence of chronic diseases like cancer, diabetes, and cardiovascular disorders are driving demand for pharmaceutical products. Moreover, continued innovation in drug discovery and development, including advances in personalized medicine and genomics, are propelling the industry’s prospects.

Given this backdrop, investors could closely monitor fundamentally strong pharma stocks Amneal Pharmaceuticals, Inc. (AMRX), Collegium Pharmaceutical, Inc. (COLL), and Sanofi (SNY) for potential returns.

In 2024, the pharma and life sciences sector anticipates deal activity between $225 billion and $275 billion, focusing on innovation and clinical differentiation to address growth challenges. Companies prioritize margin accretion in mergers and acquisitions (M&A), with continued interest in $5 billion to $15 billion deals amid geopolitical and regulatory uncertainties.

Besides, the outlook for medicine use and spending through 2028 is raised by 2% points, driven by increased patient treatment with better medicines, particularly in immunology, endocrinology, and oncology. Global use of medicines is expected to reach 3.80 trillion defined daily doses by 2028, with spending forecasted to grow by 38% during the same period.

The pharma industry's growth is further fueled by technology advancements and streamlined manufacturing, reducing contamination risks. M&A surge amid regulatory trends and a shift towards personalized medicine are reshaping supply chains. The global pharma manufacturing market is poised to grow at a CAGR of 12.5% to hit around $1.47 million by 2032.

In addition, the e-pharmacy market growth is driven by rising internet usage, enhancing consumer convenience, and technological innovations. Integration with telemedicine and personalized services boosts accessibility and engagement, while regulatory changes support market expansion.

The global e-pharmacy market is valued at about $85 billion this year and is expected to expand at a CAGR of 21% to reach  $574 billion by 2034.

Considering these favorable market trends, let’s discuss the fundamentals of three best Medical - Pharmaceuticals stocks, starting with the third choice.

Stock #3: Amneal Pharmaceuticals, Inc. (AMRX)

AMRX manufactures and distributes a wide range of pharmaceutical products globally, including generics, injectables, biosimilars, and specialty branded medications. With a focus on the central nervous system and endocrine disorders, the company also provides services to governmental agencies and healthcare institutions through its AvKARE segment.

On February 27, 2024, AMRX signed an exclusive licensing agreement with Zambon Biotech SA for IPX203, a novel formulation of carbidopa/levodopa capsules for Parkinson’s disease treatment in Europe. Zambon will seek regulatory approval and commercialize IPX203, aligning with AMRX’s goal to expand patient access globally.

On January 4, ARMN introduced 39 new retail and injectable medicines in 2023, up from 26 in 2022, with 13 launches in the fourth quarter of 2023, including five injectables such as potassium phosphate vials. These additions signify a strategic expansion of their product range aimed at improving access to affordable medications for providers and patients.

During the fourth quarter, which ended December 31, 2023, AMRX’s net revenues increased 1.2% year-over-year to $616.98 million. The company reported adjusted EBITDA and net income of $142.15 million and $43.57 million, respectively. Also, it reported an adjusted EPS of $0.14 for the quarter.

For the fiscal year 2024, AMRX anticipates net revenue to range between $2.55 billion and $2.65 billion, with adjusted EBITDA projected to be in the range of $580 million to $620 million. In addition, the company’s adjusted EPS is expected to fall between $0.53 and $0.63.

Analysts expect AMRX's revenue to increase 4.4% year-over-year to $2.69 billion, with an anticipated EPS improvement of 9.3% year-over-year to $0.64 for the fiscal year ending December 2025. Moreover, the company surpassed consensus EPS estimates in each of the trailing four quarters, which is promising.

AMRX’s shares have surged 103.7% over the past nine months and 304.4% over the past year to close the last trading session at $5.50.

AMRX’s POWR Ratings reflect this sound 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, each weighted optimally.

The stock has an A grade for Growth and Value and a B for Sentiment. In the Medical - Pharmaceuticals industry, AMRX is ranked #17 among 165 stocks.

To access additional ratings for AMRX’s Value, Momentum, Stability, and Quality, click here.

Stock #2: Collegium Pharmaceutical, Inc. (COLL)

COLL focuses on developing and commercializing pain management medications such as Xtampza ER, Nucynta ER, Belbuca, and Symproic. Its products aim to address diverse pain conditions, offering effective solutions for patients in need of long-term opioid treatment and relief from acute and persistent pain.

On February 23, 2024, COLL announced that it had authorized a new share repurchase program in January 2024, allowing for the repurchase of up to $150 million in common stock through the second quarter of 2025. Share repurchase programs are commonly executed by companies to boost shareholder value.

In the fourth quarter that ended December 31, 2023, COLL’s net product revenues grew 15.5% from a year-ago quarter to $149.75 million. Its adjusted EBITDA and net income increased 36.2% and 52.1% year-over-year to $104.15 million and $64.17 million, respectively. Moreover, the company's adjusted EPS rose 45% from the previous-year quarter to $1.58.

COLL reaffirmed its fiscal year 2024 guidance, expecting net product revenues between $580 million to $595 million, with adjusted operating expenses projected at $120 million to $125 million. Additionally, the company anticipates adjusted EBITDA in the range of $380 million to $395 million, driven by growth in Belbuca® and Xtampza® ER.

Street expects COLL’s revenue and EPS to increase 3% and 12.7% year-over-year to $583.51 million and $6.16, respectively, for the fiscal year ending December 2024. Also, the company surpassed consensus revenue estimates in each of the trailing four quarters.

COLL’s stock has gained 72.6% over the past six months and 76.6% over the past nine months to close the last trading session at $39.09. Also, the stock increased 2.8% intraday.

COLL’s POWR Ratings reflect its robust prospects. The stock has an overall B rating, translating to a Buy in our proprietary rating system.

The stock has an A grade for Quality and a B for Growth and Value. COLL is ranked #16 within the same industry.

Click here to see COLL’s ratings for Momentum, Stability, and Sentiment.

Stock #1: Sanofi (SNY)

Headquartered in Paris, France, SNY is a healthcare company known for its research, development, and marketing of therapeutic solutions worldwide. Its diverse portfolio spans pharmaceuticals, vaccines, and consumer healthcare products, alongside strategic collaborations for novel treatments in various medical fields.

On February 16, Japan became the first country to approve Dupixent® for chronic spontaneous urticaria (CSU), addressing unmet needs in patients aged 12 years and older. The approval is based on data showing a significant reduction in itch severity when Dupixent is added to standard-of-care antihistamines, with a safety profile consistent with its approved dermatological indications.

On January 23, SNY acquired Inhibrx, Inc. (INBX) for $1.70 billion, plus a contingent payment of $5 per share upon a regulatory milestone, retaining an 8% stake in New Inhibrx. This strategic acquisition adds INBRX-101, a potential treatment for Alpha-1 Antitrypsin Deficiency, bolstering Sanofi’s rare disease portfolio.

SNY’s net sales increased 1.8% from the prior-year quarter to €10.92 billion ($11.89 billion) for the fourth quarter that ended December 31, 2023. Its gross profit grew 5.6% year-over-year to €8.15 billion ($8.88 billion). The company reported operating income and business net income of €342 million ($372.34 million) and €2.08 billion ($2.27 billion), respectively.

For the fiscal year ending December 2025, Street expects SNY’s revenue to increase 8.2% year-over-year to $54.69 billion. Similarly, the consensus EPS of $6.65 for the ongoing year indicates a 52.9% year-over-year improvement.

The stock has gained 4.1% over the past month to close the last trading session at $48.29. Also, it surged marginally intraday.

SNY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

The stock has an A grade for Stability and a B for Value and Sentiment. Within the same industry, SNY is ranked #15.

In addition to the POWR Ratings stated above, access SNY’s Growth, Momentum, and Quality ratings here.

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SNY shares were trading at $48.01 per share on Monday morning, down $0.28 (-0.58%). Year-to-date, SNY has declined -3.46%, versus a 8.26% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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