The pharmaceutical sector is poised for robust growth, propelled by the rapidly expanding market for medications and vaccines. Moreover, the consistent demand for its products upholds the industry's resilience, rendering it less vulnerable to economic fluctuations. Therefore, I believe promising pharma stocks Astellas Pharma Inc. (ALPMY), Sanofi (SNY), and GSK plc (GSK) are worth your attention.
The growing aging population and chronic diseases fuel the pharma industry’s growth. Moreover, the improvements in purchasing power and access to quality healthcare for poor and middle-class families worldwide are also driving the development of the global pharma industry.
As per Statista, worldwide revenue in the pharma industry is expected to reach $1.48 trillion by 2028, growing at a CAGR of 5.8%.
Moreover, increased healthcare spending and a strong demand for generic medications drive the global generic drugs market. Additionally, the market benefits from numerous patent-expired branded drugs and innovative product introductions through strategies like licensing agreements and partnerships in the pharmaceutical industry.
The global generic drug market is expected to grow at a CAGR of 5.1% to reach $613.34 billion by 2030.
Furthermore, the global nanomedicine market is propelled by the growing use of nanotechnology in medical applications, thanks to technological advancements. Government and corporate institutions are investing in nanotechnology research, applying it to treat chronic conditions, contributing to market growth.
Brainy Insights estimates that the nanomedicine market will reach $396.15 billion by 2031, expanding at a CAGR of 12%.
In light of these encouraging trends, let’s look at the fundamentals of the three Medical – Pharmaceuticals stocks worth watching, beginning with number 3.
Stock #1: Astellas Pharma Inc. (ALPMY)
Headquartered in Tokyo, Japan, ALPMY manufactures, markets, imports, and exports pharmaceuticals in Japan, the United States, and internationally. Its product portfolio offers treatment of prostate cancer, acute myeloid leukemia, metastatic urothelial cancer, and chronic kidney diseases.
On October 13, 2023, ALPMY announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) had given a positive opinion on the use of VEOZA™ (fezolinetant) for treating moderate to severe vasomotor symptoms (VMS) associated with menopause, such as hot flashes and night sweats.
If approved by the European Commission, this non-hormonal treatment option will significantly advance women's health. Fezolinetant's innovative approach to reducing vasomotor symptoms (VMS) could potentially translate into increased market presence and revenue for ALPMY, making it a notable development for the company.
On October 11, ALPMY, BioLabs Global, Inc., and Mitsui Fudosan signed a memorandum of understanding to boost the life science ecosystem in Tsukuba and Kashiwa-no-ha, Japan, well-known science hubs. Together, they aim to enhance SakuLabTM-Tsukuba, an open innovation hub initiated by ALPMY.
In the fiscal first quarter that ended June 30, 2023, ALPMY’s gross profit increased 4.5% year-over-year to ¥306.04 billion ($2.04 billion). The company’s core operating profit rose 17.4% from the prior-year quarter to ¥64.94 billion, and core profit grew 13% year-over-year to ¥51.82 billion.
Analysts expect ALPMY’s revenue and EPS for the fiscal year 2023 (ending March 2024) to increase 124% and 61.3% year-over-year to $10.26 billion and $0.65. Additionally, the company surpassed the revenue estimates in three of the trailing four quarters, which is impressive.
The stock rose marginally intraday to close the last trading session at $12.81.
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 POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ALPMY also has an A grade for Value and a B for Stability and Quality. It is ranked #19 in the 158-stock Medical – Pharmaceuticals industry.
Click here for ALPMY’s additional Growth, Momentum, and Sentiment ratings.
Stock #2: Sanofi (SNY)
Headquartered in Paris, France, SNY is engaged in the research, development, manufacture, and marketing of therapeutic solutions globally. The company operates through three broad segments: Pharmaceuticals; Vaccines; and Consumer Healthcare.
On October 4, SNY and Teva Pharmaceuticals Industries Ltd. (TEVA) announced a collaboration to co-develop and co-commercialize TEV '574, a drug currently in Phase 2b clinical trials for the treatment of Ulcerative Colitis and Crohn's Disease, both inflammatory bowel diseases.
SNY's CEO expressed optimism about TEV '574's potential as a best-in-class option for gastrointestinal diseases, strengthening their commitment to innovative treatments.
On September 14, SNY and First Wave BioPharma, a clinical-stage biopharmaceutical company specializing in GI disease therapies, entered into an agreement to license SNY’s Capeserod, a selective 5-HT4 receptor partial agonist, for repurposing and development in GI indications.
Capeserod has demonstrated safety in previous trials, and SNY's research suggests it has potential applications in multibillion-dollar markets addressing unmet clinical needs in various GI disorders. The agreement involves upfront payment, milestone payments, and royalties, with SNY having a right of first refusal for reacquisition and commercialization.
During the fiscal second quarter that ended June 30, 2023, SNY’s net sales amounted to €9.97 billion ($10.53 billion). Its operating income increased 29.8% year-over-year to €1.86 billion ($1.96 billion). The company’s net income and EPS grew 18% and 22.3% from its previous-year quarter to €1.45 billion ($1.53 billion) and €1.15 per share, respectively.
SNY revised its fiscal year 2023 business EPS guidance, anticipating mid-single-digit growth at constant exchange rates (CER), barring any unforeseen major adverse events.
Based on July 2023 exchange rates, the currency impact is estimated to be between -6.5% to -7.5%. This revision also considers roughly €400 million ($422.44 million) in expected one-off COVID-19 vaccine revenues in the latter half of 2023, contributing to the improved outlook.
Street expects SNY’s EPS and revenue to increase 24.2% and 1.9% year-over-year to $5.56 and $47.28 billion for the fiscal year 2023. The company surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 33% to close the last trading session at $53.79. It soared 11.1% year-to-date.
SNY’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B for Value. It is ranked #16 in the same industry.
To see SNY’s additional Growth, Sentiment, Momentum and Quality ratings, click here.
Stock #1: GSK plc (GSK)
Headquartered in Brentford, the United Kingdom, GSK researches, develops, and manufactures vaccines and specialty medicines to prevent and treat diseases. It operates through four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On August 17, GSK announced the availability of AREXVY (Respiratory Syncytial Virus Vaccine, Adjuvanted) at major US retail pharmacies. AREXVY is intended for preventing RSV-lower respiratory tract disease in individuals aged 60 and older.
The Advisory Committee on Immunization Practices (ACIP) recommended that individuals aged 60 and older receive a single dose of the RSV vaccine after sharing clinical decision-making with their healthcare providers.
On July 31, GSK announced that the US FDA had granted it approval for Jemperli (dostarlimab-gxly) in combination with carboplatin and paclitaxel, followed by Jemperli as a single agent, for treating adult patients with primary advanced or recurrent endometrial cancer that is mismatch repair deficient (dMMR) or microsatellite instability-high (MSI-H).
Based on the RUBY trial, this expanded indication marks a significant advancement for patients, as it demonstrated a 71% reduction in the risk of disease progression or death when Jemperli is combined with chemotherapy. Jemperli is now approved for earlier use in this patient population, transforming cancer treatment as an immuno-oncology therapy.
GSK’s turnover for the second quarter ended June 30, 2023, increased 3.6% year-over-year to £7.18 billion ($8.75 billion). Its adjusted operating profit rose 8.1% year-over-year to £2.17 billion ($2.64 billion). The company’s adjusted profit after taxation from continuing operations increased 9.9% year-over-year to £1.70 billion ($2.07 billion).
Also, its adjusted EPS from continuing operations rose 11.8% year-over-year to 38.8 pence.
GSK’s EPS and revenue are estimated to increase 2.8% and 4.8% year-over-year to $1.10 and $9.35 billion in the fiscal third quarter that ended September 30, 2023. It surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 17.2% to close the last trading session at $36.67.
GSK’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Stability, Sentiment, and Quality. It is ranked #11 in the Medical – Pharmaceuticals industry.
In addition to the POWR Ratings stated above, one can access GSK’s additional POWR Ratings for Growth and Momentum here.
What To Do Next?
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SNY shares were trading at $53.54 per share on Wednesday morning, down $0.25 (-0.46%). Year-to-date, SNY has gained 13.52%, versus a 14.69% 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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