The pharmaceutical industry is evolving with trends like Artificial Intelligence (AI), robotic technology, personalized medicine, and rising drug approvals, reflecting a dynamic and competitive landscape responsive to changing healthcare demands.
Therefore, investors could consider investing in quality pharma stocks Supernus Pharmaceuticals, Inc. (SUPN), Astellas Pharma Inc. (ALPMY), and Eli Lilly and Company (LLY).
The pharmaceutical industry, marked by intense competition and consolidation, is shaped by a sizable aging population, high healthcare spending, and robust research and development. Recent industry trends in gene therapy, digital health, biosimilars, and precision medicine are boosting the sector.
The U.S. pharmaceutical market is projected to grow at a CAGR of 6% to reach $903 billion by 2030. Furthermore, the global pharmaceutical manufacturing market is expected to grow at a CAGR of 7.6% from 2023 to 2030.
In addition, global medicine spending is projected to reach around $1.90 trillion by 2027, driven by a 3-6% growth rate, fueled by new drug launches and expanded use of recently introduced brands, despite payer efforts to limit budgets and the influence of lower-cost alternatives.
Furthermore, the pharma 4.0 market is poised for substantial growth from 2023 to 2030, driven by key players adopting digital strategies and industry 4.0 capabilities. The global pharma 4.0 market is predicted to grow at a CAGR of 18% and reach around $63.17 billion by 2032.
Considering these conducive trends, let’s look at the fundamentals of the three Medical - Pharmaceuticals stocks, starting with number 3.
Stock #3: Supernus Pharmaceuticals, Inc. (SUPN)
SUPN focuses on developing and selling treatments for central nervous system diseases in the United States. Its products include medications for epilepsy, migraine, ADHD, and Parkinson's Disease, with ongoing clinical trials for new candidates. The company distributes its products through various channels.
On November 2, SUPN's apomorphine infusion device (SPN-830) for treating Parkinson’s disease had its New Drug Application (NDA) resubmission accepted by the Food and Drug Administration (FDA).
The NDA is now considered filed, with a PDUFA date set for April 5, 2024. SPN-830 could offer a novel and less invasive treatment option for Parkinson's patients after approval.
During the third quarter ended September 30, 2023, SUPN reported non-GAAP total revenues of $133.30 million, up 23.7% year-over-year. The company's adjusted operating earnings grew 46.9% from the previous year's quarter to $37.30 million. Its total net product sales stood at $149 million.
As of September 30, 2023, the company's total assets amounted to $1.29 billion.
For the full fiscal year 2023, the company predicted total revenues ranging from $590 million to $610 million, and its non-GAAP operating earnings are expected to fall under $95 million to $110 million.
Street expects SUPN's revenue to grow 15.6% year-over-year to $156.70 million for the second quarter ending June 2024. Its EPS is expected to be $0.45 for the same quarter. The company surpassed the EPS estimates in each of the trailing four quarters, which is impressive.
SUPN’s shares have gained 11.4% over the past month to close the last trading session at $26.78.
SUPN’s POWR Ratings reflect its positive prospects. 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.
SUPN has an A grade for Value and a B for Quality. Within the Medical - Pharmaceuticals industry, it is ranked #33 out of 156 stocks.
In addition to the POWR Ratings stated above, one can access SUPN’s additional Growth, Momentum, Stability, and Sentiment ratings here.
Stock #2: Astellas Pharma Inc. (ALPMY)
Based in Tokyo, Japan, ALPMY is a global pharmaceutical company engaged in the manufacturing, marketing, and international trade of pharmaceuticals. The company's portfolio includes treatments for prostate cancer, acute myeloid leukaemia, metastatic urothelial cancer, and anaemia related to chronic kidney disease.
On November 30, the FDA granted priority review for PADCEV® (enfortumab vedotin-ejfv) in combination with KEYTRUDA® (pembrolizumab) as a first-line treatment for advanced urothelial cancer.
The application targets approval for both cisplatin eligible and ineligible patients, with a target action date of May 9, 2024, based on positive Phase 3 trial results indicating improved survival outcomes.
On November 16, the University of Tsukuba and ALPMY partnered strategically to advance digitalization in drug discovery research and bolster the life science ecosystem in Tsukuba and Kashiwa-no-ha.
The collaboration includes industry-academia initiatives, the exchange of research resources, and the establishment of a collaborative research environment at ALPMY’s SakuLabTM-Tsukuba, fostering interdisciplinary innovation and startup creation.
For the six months ended September 30, 2023, ALPMY's revenue and gross profit grew marginally and 2.2% from the prior-year quarter to ¥767.14 billion ($5.21 billion) and ¥623.78 billion ($4.24 billion), respectively.
The company reported total assets of ¥3.54 trillion ($24.06 billion) as of September 30, 2023, compared to total assets of ¥2.46 trillion ($16.68 billion) as of March 31, 2023. Moreover, its cash and cash equivalents at the end of the period stood at ¥333.99 billion ($2.27 billion).
For the full fiscal year 2023, the company forecasted revenue of ¥1.61 trillion ($10.92 billion), operating profit of ¥123 billion ($835.30 billion), and a profit for the year totaling ¥85 billion ($577.24 million).
ALPMY’s revenue and EPS are expected to grow 131.1% and 56.7% year-over-year to $10.59 billion and $0.63 for the fiscal year ending March 2024, respectively. The company surpassed the revenue estimates in three of the trailing four quarters.
ALPMY’s shares increased 2.8% over the past month to close the last trading session at $12.15.
ALPMY’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 stock has an A grade for Stability and a B for Value and Quality. Within the same industry, it is ranked #27.
Click here for ALPMY’s additional Growth, Momentum, and Sentiment ratings.
Stock #1: Eli Lilly and Company (LLY)
LLY is a global pharmaceutical company known for discovering, developing, and marketing a wide range of human pharmaceuticals worldwide. Its diverse product portfolio includes treatments for diabetes, cancer, autoimmune diseases, mental health disorders, and COVID-19.
On December 5, LLY announced that its Zepbound™ (tirzepatide) was accessible in U.S. pharmacies for adults dealing with obesity or weight-related medical problems. Approved by the FDA, Zepbound offers six doses and comes with a savings card program to enhance accessibility for eligible individuals. Also, the company is investing in manufacturing expansion to meet anticipated demand.
During the third quarter that ended September 30, 2023, LLY generated revenue of $9.50 billion, up 36.8% year-over-year. The company's non-GAAP gross margin grew 41.5% from the previous-year quarter to $7.76 billion. Its non-GAAP net income and EPS stood at $94.80 million and $0.10, respectively.
Analysts expect LLY’s revenue and EPS to grow 22.8% and 33.8% year-over-year to $8.97 billion and $2.80 for the fourth quarter ending December 2023. The company surpassed the revenue estimates in three of the trailing four quarters.
The stock has gained 84.7% over the past nine months and 61.1% year-to-date to close the last trading session at $589.25.
LLY’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.
It has a B grade for Growth, Sentiment, and Quality. Within the same industry, it is ranked #22.
To see LLY’s additional POWR Ratings for Value, Momentum, and Stability, click here.
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LLY shares were trading at $584.49 per share on Thursday afternoon, down $4.76 (-0.81%). Year-to-date, LLY has gained 61.34%, versus a 21.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
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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