The pharmaceutical industry is well-positioned for significant expansion, driven by robust demand amid the growing prevalence of chronic diseases and an aging population, continued innovations and discoveries in drug discovery and development, and technological advances such as AI, big data analytics, and precision medicine.
Amid this backdrop, investors could consider investing in quality pharmaceutical stocks Zoetis Inc. (ZTS), Viatris Inc. (VTRS), and Bristol-Myers Squibb Company (BMY) with significant potential.
With a rapid surge in personalized medicine and targeted therapies, the pharmaceutical market in the U.S. is experiencing robust growth. In 2024, market revenue is projected to reach $636.90 billion. Further, the market is expected to grow at a CAGR of 6% from 2024 to 2028, resulting in a volume of $802.80 billion by 2028.
Over the past five years, world spending on medicine rose by an impressive 35% and is expected to increase by 38% through 2028. Moreover, the updated outlook for the U.S. market is raised by 3 percentage points to 2-5% CAGR through 2028, reflecting more patient use of higher-value therapies.
Moreover, increasing research and development (R&D) investment by pharma companies and rising global initiatives for research on rare diseases and orphan drugs are influencing the growth of the drug discovery services market. The market is expected to hit $41.30 billion by 2028, growing at a CAGR of 14.9%.
Besides, over time, the involvement of AI in the pharmaceutical market has drastically increased in integrating advanced machine learning algorithms and the application of data analytics technologies into drug discovery, development, and manufacturing. The global AI in the pharmaceutical market is expected to grow to $97.35 billion by 2030 at a CAGR of 29.2%.
Given these favorable market trends, let’s look at the fundamentals of the top three Medical - Pharmaceutical stocks, beginning with the third choice.
Stock #3: Zoetis Inc. (ZTS)
ZTS engages in the discovery, development, manufacture, and commercialization of animal health medicines, vaccines, and diagnostic products and services internationally. The company commercializes products primarily across species and companion animals.
On May 22, ZTS’ Board of Directors declared a dividend of $0.43 per share for the third quarter of 2024. The dividend will be paid on September 4, 2024, to all holders of record of its common stock as of the close of business on Thursday, July 18, 2024.
ZTS pays an annual dividend of $1.73, which translates to a yield of 1.03% at the current share price. Its four-year average dividend yield is 0.67%. Moreover, the company’s dividend payouts have increased at a CAGR of 22.7% over the past five years. ZTS has raised its dividends for five consecutive years.
ZTS’ revenue for the first quarter that ended March 31, 2024, increased 9.5% year-over-year to $2.19 billion. Its adjusted gross profit grew 9.3% from the year-ago value to $1.55 billion. Adjusted net income and EPS attributable to Zoetis came in at $634 million and $1.38, up 4.4% and 5.3% from the prior year’s quarter, respectively.
Street expects ZTS’ revenue and EPS for the second quarter (ending June 2024) to increase 6.1% and 5.9% year-over-year to $2.31 billion and $1.49, respectively. Also, the company has topped the consensus EPS and revenue estimate in three of the trailing four quarters.
Shares of ZTS have declined marginally over the past year to close the last trading session at $168.18.
ZTS’ bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality. Within the Medical - Pharmaceutical industry, ZTS is ranked #33 out of 154 stocks.
Click here to access additional ratings of ZTS for Momentum, Sentiment, Stability, Value, and Growth.
Stock #2: Viatris Inc. (VTRS)
VTRS operates as a healthcare company globally. The company operates in four segments: Developed Markets; Greater China; JANZ; and Emerging Markets. The company provides prescription brand drugs, generic drugs, complex generic drugs, biosimilars, and active pharmaceutical ingredients (APIs).
On May 1, VTRS expanded its wellbeing program by launching unmind, a leading workplace resource focused on mental health. Unmind is a leading provider of workplace mental health solutions that encourages colleagues to live life fully and is an essential part of the company’s mission to empower people worldwide to live healthier at every stage of life.
On April 15, VTRS launched in Canada PrGlatiramer Acetate Injection 20 mg/mL for once-daily injection, the first generic bioequivalent version of Teva's Copaxone® 20 mg/mL, indicated for treating patients with Relapsing-Remitting Multiple Sclerosis (RMMS), a chronic inflammatory disease of the central nervous system.
During the first quarter that ended March 31, 2024, VTRS reported total revenues of $3.66 billion, and its adjusted gross profit was $2.15 billion. Its adjusted EBITDA amounted to $1.19 billion for the quarter. The company’s adjusted net earnings and EPS came in at $812.70 million and $0.67, respectively.
Analysts expect the company’s EPS for the fourth quarter (ending December 2024) to increase 9.7% year-over-year to $0.68. Moreover, VTRS’ shares have gained 3.7% over the past nine months to close the last trading session at $10.25.
VTRS’ sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Growth. Within the Medical - Pharmaceuticals industry, VTRS is ranked #32 out of 154 stocks.
In addition to the POWR Ratings we’ve stated above, we also have VTRS ratings for Stability, Quality, Momentum, and Sentiment. Get all VTRS ratings here.
Stock #1: Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products internationally. The company offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On June 21, BMY announced that the European Medicines Agency validated the extension application to introduce a new route of administration for Opdivo® that includes a new pharmaceutical form and a new strength (600 mg/vial) across multiple previously approved adult solid tumor indications following completion of nivolumab plus ipilimumab combination therapy.
On June 14, BMY announced that the U.S. FDA granted accelerated approval of Augtyro™ (repotrectinib) for treating adult and pediatric patients 12 years of age and older with solid tumors that have a neurotrophic tyrosine receptor kinase (NTRK) gene fusion.
Augtyro is the single FDA-approved treatment option for NTRK-positive tumors studied in both TKI-naïve and TKI-pretreated patients across solid tumors, demonstrating clinically meaningful response rates in the TRIDENT-1 trial.
For the first quarter that ended March 31, 2024, BMY’s total revenues increased 4.7% year-over-year to $11.86 billion. Its non-GAAP gross profit rose 1.5% from the year-ago value to $8.95 billion. The company’s total assets stood at $99.03 billion as of March 31, 2024, compared to $95.16 billion as of December 31, 2023.
Street expects BMY’s revenue for the second quarter (ending June 2024) to increase 2.4% year-over-year to $11.50 billion. The company’s revenue for the fiscal year (ending December 2024) is expected to grow 2.4% year-over-year to $46.09 billion. Also, the company surpassed the consensus revenue estimates in three of the trailing four quarters.
BMY’s stock has increased 42.8% over the past six months and 57.2% over the past year to close the last trading session at $41.69.
BMY’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
BMY has a B grade for Value and Growth. It is ranked #9 out of 154 stocks in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have BMY ratings for Sentiment, Momentum, Quality, and Stability. Get all BMY ratings here.
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BMY shares were trading at $41.17 per share on Friday afternoon, up $0.13 (+0.32%). Year-to-date, BMY has declined -17.89%, versus a 14.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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