I have long wanted a dedicated thread for the pharmaceutical industry. Perhaps it’s not worth separating threads for different companies, but rather discussing interesting pharmaceutical companies here that you have invested in or considered investing in.
The coronavirus epidemic is one example of the many health threats that humanity has to face from time to time. These exist and these will come. And especially companies in the biopharma sector are those that either win or lose with the medicines they develop. I myself have long been interested in this segment and the pharmaceutical industry in general. It hasn’t performed as well as I perhaps initially thought, but it provides a steady stream of dividends. However, I strongly believe that the need for new, more effective and patient-friendly medicines and treatment methods will increase in the future. There are also many “gambling papers” in this segment, whose stock price rises almost from nothing, fueled by rumors of new drugs or M&A. American investors, in particular, have excelled in this. If you crave excitement in your life, you can buy those too and enjoy the ride.
In my very long-term portfolio:
Bayer /XETRA
Gilead Sciences /Nasdaq
Novo Nordisk /OMXC
Roche /SIX
I’m interested to hear what you have in this area. Also, the reasons why you bought them. I will write more on the topic later.
Biohit and Russia screenings. If things start to go well in Russia and China also comes into the picture soon.
You can find a page on Inderes: “Biohit’s bright future”
Biohit seems to be one of those speculative stocks. If things go well, they go really well, but you can also lose your money. I think I invested in this back in the 90s, but I didn’t write down the reasons for buying/selling then. As I recall, I took a bit of a hit on it.
The downside of the whole segment is that development costs are really high, and then there are huge delays in approvals, which are still country-specific. The EU now seems to be one country in this regard.
Fingers crossed that it goes well for you, Anatooli, with this one.
The pharmaceutical industry has these dividend aristocrats; one such company is Roche, which has raised its dividend for 33 consecutive years, assuming the board’s proposal of 9 CHF goes through.
The pharmaceutical industry will certainly be one of the megatrends in the future. In developing countries, we have only scratched the surface, and several company reports show how the results from developing countries are gaining a stronger foothold. The pharmaceutical industry is quite risky in itself, as drug development takes time, and there is no certainty of their market entry. I have diversified my portfolio to own both pharmaceutical manufacturers and manufacturers of devices and supplies. In my opinion, the risk associated with devices is smaller than with traditional drugs, making them somewhat easier to own, although they do go through the same FDA processes as drugs.
I own the following device manufacturers:
Revenio
Medtronic
J&J
Stryker has been on my watch list for a long time, but its valuation is very tight. Stryker is in many ways the world’s leading manufacturer of surgical robots, their portfolio is extensive, and growth is very strong.
Medtronic’s portfolio includes pacemakers and insulin pens and pumps. Unfortunately, diabetes is one of those diseases that will increase dramatically in the coming years. So, MDT is a pleasure to own.
Everyone probably knows J&J, so I probably don’t need to write much about it. It’s like an ETF for the pharmaceutical industry.
My pharmaceutical companies include:
AbbVie
Novo Nordisk
AbbVie will become one of the world’s largest pharmaceutical companies once the Allergan deal is successfully completed. AbbVie’s growth has been immense thanks to the drug Humira. Now that Humira’s patents are starting to expire and competition is intensifying, AbbVie needs to somehow compensate for the growth. In the last year, AbbVie received marketing approvals for two excellent drugs, Rinvoq and Skyrizi. These are not expected to be blockbusters like Humira, but combined with Allergan’s portfolio, the gap left by Humira will be somewhat filled. One definite weakness of AbbVie is its absolutely massive debt, which mainly consists of the Allergan acquisition. As I stated at the beginning, one of the biggest risks for drug manufacturers is obtaining marketing approvals, as evidenced by AbbVie’s ROVA-T, which led to massive write-offs.
Novo Nordisk is a world-class company with incredibly good products. Diabetes is a growing disease, and Novo’s upcoming drugs have a good chance of capturing a large part of the market. Rybelsus, which is Novo’s semaglutide, is the first oral GLP-agonist. This is expected to be Novo’s next flagship product, and all signs currently indicate that it will indeed be.
Gilead has been on my watch list for a long time. The valuation has been cheap for a while, but the company’s management has not convinced me. A lot of good news has been leaking about the new drug Filgotinib, so I guess Gilead will find its way into my portfolio at some point.
I have Johnson&Johnson + Abbvie as pharmaceutical companies in my portfolio.
JNJ - Mcap $390B - Revenue $82B
Johnson&Johnson is a Defensive Dividend King (raised dividend for 57 years - dividend $3.8 / 2.5% - increase #58 in April).
J&J has an AAA Credit rating - in Moody’s words; “Johnson & Johnson’s Aaa rating reflects the company’s excellent financial flexibility attributable to large scale, strong product and geographic diversity, high profit margins and low financial leverage. The company’s strength across three sizeable divisions – pharmaceuticals, medical devices and consumer products”
The company guided for 4.5-5.5% revenue growth for 2020. The company has a strong “Drug pipeline,” which will ensure a massive portfolio in the future (e.g., Listerine, Band-Aid, Nicorette). In 2019, they spent $11B on R&D, meaning the company generates strong FCF. JNJ is also actively involved in M&A, as Elina also noted.
ABBV - Mcap $121B - Revenue $33B
Abbvie has been an interesting case. Abbvie spun off from Abbot Laboratories. As Pandakarhu noted, the company has an interesting future ahead. The company made a tender offer for Allergan, which should materialize soon. Humira indeed brings in most of Abbvie’s revenue (patent expires in the US in 2022). Abbvie’s debt burden will increase with the Allergan acquisition + the expiration of Humira’s patent is one reason why Abbvie has a relatively high dividend yield (5.8%) and is a riskier stock than JNJ. Abbvie raised its dividend by +10% in November. The massive FCF of Abbvie and Allergan enables good dividends, a drug pipeline, and debt repayment. Abbvie has not yet published its Q4 2019 results.
Slightly off-topic, I also own Medical Properties Trust (MPW), which owns hospital properties in the US/Italy/Spain/Germany/UK.
Good that this was also opened, I didn’t get around to it myself, thanks @Elina_A
Small companies in the portfolio, also known as lottery tickets.
Oncology Venture
Spectracure
Hamlet Pharma
Genovis
All, except for Genovis, have the potential for multi-bagger returns in a short timeframe, but on the other hand, all could also go bankrupt.
My biggest hope is with Hamlet; if the tests continue to yield results similar to what they have so far, we are on the verge of something truly big, like a 100-bagger.
Nice to read your list. And great to hear that there are others like us
I’ve also had Stryker/NYSE on my watch list, and for the same reason, I haven’t bought it. Is this one of those always-expensive stocks? I also listed Medtronic at some point, but it accidentally dropped off, and I didn’t follow it after that.
Abbvie/NYSE has been a challenger to Gilead. It came out of nowhere and challenged Gilead in Hep-C (Hepatitis C) drugs. Gilead has, in a way, been an incredible growth story that fizzled out when they went and cured Hep-C instead of just alleviating patients’ situations. Hillary C (Clinton) already complained about the high prices of the company’s drugs at the time, but the price tag is small if you consider that the disease is cured, and the medicine isn’t taken forever. Gilead’s stock price plummeted, and not even their excellent HIV/AIDS drugs have ‘cured’ the stock. I agree about the management, but since CEO Daniel O’Day (from Roche) took the helm, I think the situation has changed for the better. Other changes also occurred, for example, the CCO (from BMS (Bristol Myers Squibb)) changed during 2019.
Comparing Abbvie and Gilead, I think Gilead perhaps has a slightly better product pipeline. But both are good in their field. They are able to develop more because they have enough of their own drugs on the market to finance the development.
I also agree about Novo. Super in diabetes. And additionally, obesity and hemophilia drugs in the portfolio. Sanofi stopped developing diabetes drugs last year, so it’s clearly a highly competitive market. Eli Lilly/NYSE seems to be one of Novo’s biggest competitors. Novo’s only downside is that the Danish tax authority takes a large chunk of the dividend, and only 52% makes it to me… Annoying.
Yeah, Roche pales in comparison here
As a note for those unfamiliar with the term, a Dividend King has increased its dividend for at least the last 50 years
Right now, it’s just a boring Oriola (+1.3%). I’m still lying to myself that if the company ever overcomes its various temporary problems in the middle of the next millennium, the stock has significant upside potential.
BBS is being monitored, but I haven’t had time to properly familiarize myself with it. I believe the product has very interesting potential, but it would require a more thorough investigation of the topic.
Orion is close to my heart. I sold it earlier with a good profit, after which it continued to grow. The portfolio is interesting, so I’m monitoring the situation.
Yeah. But tomorrow probably only ‘after market close’, so after 4pm Eastern Time. The release event starts at 4:30 pm, after which it will be available fairly soon, for example, on Seeking Alpha. So tomorrow you can still buy before the 2019 data and then on Wednesday after.
I first heard about Calliditas Therapeutics from a friend who praised their groundbreaking work in difficult kidney diseases. I previously looked up information about the company and it seemed they were in deep waters; in Q3 2019, they had no sales at all and reported a loss of about 50 MSEK. In the summer, they had apparently secured 210 MSEK in funding through a directed share issue. Let’s hope they manage to surface and start generating revenue and positive results.
I’ve heard the name Oncopeptides, but I don’t remember much. I should research them further.
I hope so too. With the new management, at least initially, the promises seemed to hold true better. It could also just be a coincidence. The market has long punished Gilead. The reason is probably that it was once a rocket, and then the Hep-C market proved to be limited (because, darn it, the patients recovered). Gilead became a bit like a Nokia-type stock, which fell on good news and fell more on bad news.
Now, they have been developing Ebola drugs for some time, but because Ebola has not been as prominent as Corona, it has not had an effect. Only with Corona has it gained momentum.
I’ve had this in my portfolio too. Now only a very small amount left.
But I’ve held onto the same hope, that they might finally get their own systems in order.
Australia’s BBS Pharmaceuticals (BBS Pharmaseuticals) is anything but boring
Orion is probably quite a difficult case for analysts. Could it be a stock like Elisa and Kesko, which almost none of its owners want to give up? And the price remains high…
agree about Novo. Super in diabetes. And additionally, obesity and hemophilia drugs in the portfolio. Sanofi stopped developing diabetes drugs last year, so it’s clearly a highly competitive market. Eli Lilly/NYSE seems to be one of Novo’s biggest competitors. Novo’s only downside is that the Danish tax authority takes a large chunk of the dividend, and only 52% makes it to me… Annoying.
