The pharmaceutical market continues to expand globally with aging populations and the development of new drugs. Global medical spending is expected to increase to nearly $1.80 trillion by 2026.
The United States accounts for about 45% of the global pharma market. U.S. pharmaceutical sales should remain robust in 2022 due to continued COVID-19 vaccine rollouts and surging demand for treatments. While vaccinations buoy the industry in the near term, the market’s growth is expected to be driven by the aging population in the long run.
The global pharmaceutical market is expected to reach $1.59 trillion in 2022. It is expected to hit $2.14 trillion in 2026, growing at a 7.7% CAGR.
Given the favorable prospects of the industry, pharmaceutical stocks Assertio Holdings, Inc. (ASRT), Bayer Aktiengesellschaft (BAYRY), Eagle Pharmaceuticals, Inc. (EGRX), and Merck & Co. Inc. (MRK), which possess solid growth attributes, could be solid investments at their current price levels.
Assertio Holdings, Inc. (ASRT)
ASRT is a specialty pharmaceutical company that offers medicines in different treatment areas, including neurology, pain, and inflammation. The company provides INDOCIN, an oral solution to treat moderate to severe rheumatoid arthritis, and CAMBIA, a non-steroidal anti-inflammatory drug (NSAID).
In March, ASRT and BlinkRx, a patient access solution, announced their collaboration to support healthcare professionals and patients undergoing treatment with Otrexup, a single-dose auto-injector containing prescription medicine.
ASRT’s total revenue increased 36.1% year-over-year to $ 36.54 million in the first quarter ended March 31. Its income from operations grew 54% from the year-ago value to $11.56 million, while its adjusted earnings improved 70.3% year-over-year to $17.53 million.
The company’s adjusted EPS increased 40.7% from its year-ago value to $0.38. ASRT’s EBIT has grown at a CAGR of 72.5% over the past three years. The consensus revenue estimate of $131.73 million for the fiscal year 2022 represents an 18.7% increase from the prior year.
The stock has gained 79.3% over the past year and 30.7% year-to-date to close its last trading session at $2.85.
ASRT’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ASRT is rated an A in Growth, Value, Sentiment, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #9 of 172 stocks. To see additional POWR Ratings for Momentum and Stability for ASRT, click here.
Bayer Aktiengesellschaft (BAYRY)
BAYRY operates as a life science company worldwide. It works through Pharmaceuticals, Consumer Health, and Crop Science segments. The company distributes its offerings through wholesalers, pharmacies and pharmacy chains, supermarkets, online and other retailers, hospitals, and directly to farmers. It is headquartered in Leverkusen, Germany.
In June, the company announced that its subsidiary BlueRock Therapeutics LP had established a new site for cell therapy innovation on the company’s Berlin-based campus. This move is part of the company’s plan to advance cell therapies.
In April, BAYRY announced pursuing an agreement under which Ginkgo Bioworks Holdings, Inc. (DNA) is expected to acquire BAYRY’s West Sacramento Biologics Research & Development (R&D) site and internal discovery and lead optimization platform. The company’s work with DNA is expected to accelerate the biological pipeline of BAYRY’s Crop Science Division.
For the first quarter ended March 31, BAYRY’s net sales increased 18.7% year-over-year to €14.64 billion ($15.45 billion). Its net income rose 57.5% from the year-ago value to €3.29 billion ($3.47 billion). Gross profit improved 24% from the prior-year period to €9.46 billion ($9.99 billion).
BAYRY’s net income has grown at a CAGR of 30.9% over the past three years, while its EPS has grown at a CAGR of 57.5% over the same period.
Street EPS estimate for the fiscal year 2022 of $1.95 indicates a 6.4% year-over-year improvement. Street revenue estimate for the same year of $51.06 billion reflects a rise of 4.1% year-over-year. BAYRY has beaten consensus EPS estimates in each of the trailing four quarters, which is impressive.
BAYRY’s stock has gained 1.7% over the past year and 18.4% year-to-date to close its last trading session at $15.69.
BAYRY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our proprietary rating system.
BAYRY has an A grade for Growth and Value and a B for Stability. In the Medical-Pharmaceuticals industry, it is ranked #10. Click here to see additional POWR Ratings for BAYRY (Quality, Sentiment, and Momentum).
Eagle Pharmaceuticals, Inc. (EGRX)
Eagle Pharmaceuticals is a pharmaceutical company that focuses on developing and commercializing products to treat diseases of the central nervous system, critical metabolic care, and oncology in the United States.
On June 9, EGRX announced the completion of its acquisition of the entire issued share capital of Acacia Pharma Group. “The closing of this transaction is a great achievement for Eagle both strategically and financially. The addition of the two products expands our presence in the acute care space, and we believe that our highly capable hospital-based salesforce will have great success commercializing these assets.”, said Scott Tarriff, President and Chief Executive Officer of EGRX.
In the first quarter ended March 31, EGRX’s revenue increased 180.9% year-over-year to $115.87 million. Its income from operations grew 1,685.7% year-over-year to $59.83 million, while its adjusted non-GAAP net income came in at $52.15 million, up 1,546.7% year-over-year. The company’s adjusted non-GAAP EPS improved by 1,583.3% from the prior-year period to $4.04.
EGRX’s revenue has grown at a CAGR of 4.4% over the past three years, while its EPS has grown at a CAGR of 2.60% over the same period.
Analysts expect EGRX’s revenue for the quarter ending June 2022 to be $116.90 million, indicating a 142.9% year-over-year growth. The company’s EPS is expected to increase 261.7% from the prior-year period to $3.36 for the same quarter.
EGRX has gained marginally over the past five days to close its last trading session at $42.89.
It is no surprise that EGRX has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an A grade for Growth and Value and a B for Quality. It is ranked #21 in the Medical – Pharmaceuticals industry.
Beyond what we’ve stated above, we have also given EGRX grades for Momentum, Stability, and Sentiment. Get all the EGRX ratings here.
Merck & Co., Inc. (MRK)
MRK is a global healthcare company operating through its two broad segments of Pharmaceutical, which offers human health pharmaceutical products; and Animal Health, which develops and markets veterinary pharmaceuticals.
In June, MRK announced that the European Commission had approved KEYTRUDA, MRK’s anti-PD-1 therapy, as a monotherapy for the adjuvant treatment of adults and adolescents aged 12 years and older with stage IIB or IIC melanoma and who have undergone complete resection. This approval allows the marketing of KEYTRUDA in all 27 EU member states.
In the same month, the company announced that the U.S. Food and Drug Administration (FDA) had approved an expanded indication for VAXNEUVANCE (Pneumococcal 15-valent Conjugate Vaccine) to include children six weeks through 17 years of age for the active immunization for the prevention of invasive disease.
Also, the U.S. Centers for Disease Control and Prevention’s (CDC’s) Advisory Committee on Immunization Practices (ACIP) unanimously voted to include VAXNEUVANCE as a recommended option for vaccination in infants and children.
MRK’s net sales increased 49.6% year-over-year to $15.90 billion in the first quarter of 2022. Its non-GAAP net income improved 84.2% from the prior-year period to $5.43 billion. The company’s non-GAAP EPS increased 84.5% from its year-ago value to $2.14.
MRK’s net income has grown at a CAGR of 19.1% over the past three years, while its EPS has grown at a 20.1% CAGR over the same period.
The consensus revenue estimate of $13.73 billion for the fiscal second quarter (ending June 2022) reflects a 20.5% increase from the same period last year. The consensus EPS estimate of $1.67 indicates a 27.7% improvement year-over-year for the same quarter.
The company has an impressive surprise earnings history, as it surpassed consensus EPS estimates in three of the trailing four quarters.
The stock has gained 19.6% over the past year and 19.9% year-to-date to close its last trading session at $91.89.
MRK has an overall A grade, equating to Strong Buy in our proprietary rating system. The stock is rated an A in Growth and a B in Value, Stability, Sentiment, and Quality. Within the same industry, it is ranked #2.
To see more of MRK’s component grades, click here.
ASRT shares were trading at $2.85 per share on Wednesday afternoon, down $0.00 (0.00%). Year-to-date, ASRT has gained 30.73%, versus a -19.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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