It Introduced Ozempic to the World. Now It Must Remake Itself.
Key Players and Market Trends
In the pharmaceutical market, numerous key players, including multinational corporations, biotechnology firms, and generic drug manufacturers, actively shape the industry landscape. Entities such as Pfizer, Novo Nordisk, and Vertex Pharmaceuticals Incorporated, engage in extensive research and development endeavors to introduce novel medications and therapies, often targeting prevalent diseases and medical conditions.
Now, you might be asking, why do I need to learn more about these companies? To answer that, we have to turn to analysts who determine the favorability of a company by studying its performance in the past and future projections provided by the company’s investments and roadmap. For instance, the pipeline is a crucial variable that helps determine where the company is headed. Thoughts?
Importance of Studying Pipeline
The term "pipeline" encompasses a range of potential drugs, including vaccines, steroids, immune system suppressants, aphrodisiacs, and more, all currently in different stages of research and development (R&D). Typically, it takes around a decade and billions of dollars for a drug to transition from a scientist's initial concept to being available at pharmacy counters.
The primary reason for the occasional bottleneck in this pipeline is the FDA's responsibility to safeguard consumers from drugs that could pose unexpected side effects. The FDA enforces stringent guidelines and conducts rigorous tests that a drug must pass before it's approved for sale. While some investors or individuals battling severe illnesses might lament the FDA's involvement, viewing it as an obstacle in an already complex process, consumers need to recognize the crucial role the FDA plays in ensuring the safety of medications before they reach our hands.
What to Look For In Startup Pharma Opportunities??
Well-established companies usually seem like a safer bet when it comes to investments compared to newer ones. Whenever there's a promising new company with a groundbreaking drug, it's common for a bigger company to step in and either team up with them or buy them out completely. This isn't just beneficial for the startup, as it also grants them access to the larger company's distribution channels. Plus, if there are any setbacks like the FDA halting drug development, bigger companies have the resources to keep pushing forward.
That being said, smaller firms that have a track record of collaborating to bring drugs from the lab to the market shouldn't be overlooked. Big companies typically target these smaller firms, valued between $1 billion to $5 billion, especially if their drug candidates are in the later stages of clinical trials. These kinds of deals, often referred to as "bolt-on" transactions, help big companies expand their pipeline.
Some startups opt to go it alone and market their drugs directly to doctors in areas where the disease they're targeting is most prevalent. While this approach can lead to significant success, it's more of an exception rather than a rule. Most investors tend to be wary of backing new biotech companies, especially in their early stages when they're seen as more of a risk.
Novo Nordisk (NVO) Evaluation
Novo Nordisk has emerged as a formidable force, showcasing an impressive ascent of 68.9% over the past year alone. This meteoric rise, translating to a market capitalization of $430 billion, underscores the company's prowess in delivering substantial returns, boasting a staggering 7,800% growth trajectory for shareholders since March 2004.
The recent green light from the U.S. Food and Drug Administration (FDA) heralds a pivotal milestone for Novo Nordisk, as it secures additional approval for its groundbreaking weight-loss medication, Wegovy. Elevating its utility, Wegovy now addresses cardiovascular risk reduction in overweight individuals, heralding a newfound revenue avenue for the pharmaceutical juggernaut.
The bottom line is Novo Nordisk’s sales are expected to rise by 23.5% to $41.77 billion in 2024, and by 18.2% to $49.4 billion in 2025, according to experts. Adjusted earnings are forecast to expand to ~$3 per share in 2024, with continued growth to $3.97 per share in 2025.
Market Cap: 430.86 billion USD
Current Stock Price: $126.99
52-week range: High - $138.28 & Low - $75
Earnings Per Share: $0.71 (72% increase YoY)
Dividend Yield: 0.40 % annual, $0.13 quarterly
AbbVie's (ABBV) Cornerstone and Market Evaluation
AbbVie, once anchored securely by the monumental success of Humira, witnessed its vessel facing turbulent waters as the stalwart drug relinquished its patent shield in 2023. The $21 billion behemoth, Humira, once the cornerstone of AbbVie's fiscal fortress, now faced the tempest of market competition as its patent protection waned.
The quarter that followed witnessed a formidable decline in global Humira sales, a precipitous 40% plunge that reverberated across the industry. Yet, amidst the tumult, AbbVie's helmsmen stood steadfast. Enter Skyrizi and Rinvoq, the twin titans of AbbVie's immunology arsenal. From their humble beginnings, these fledgling medications burgeoned into formidable juggernauts. Their ascent, from a modest $130 billion in 2019 to a staggering $273.6 billion in the previous fiscal year, heralded a new era for AbbVie.
But lo, there's more to this tale than meets the eye. Beyond the realm of numbers lies the siren song of dividends, beckoning investors with promises of passive income. A tantalizing 3.34% dividend yield, a testament to AbbVie's commitment to rewarding its shareholders, amplifies the allure of this investment.
Market Info as of 04/04/2024
Market Cap: 313.99 billion USD
Current Stock Price: $177.33
52-week range: High - $182.89 & Low - $130.96
Earnings Per Share: $2.72 for 2023 (Fiscal Year) which is down 58.97% from 2022
Dividend Yield: 3.34% annual, $1.55 quarterly
BioNTech: Beyond the Pandemic Response
BioNTech has emerged as a beacon of hope, particularly renowned for its groundbreaking achievements in combatting the COVID-19 pandemic. Yet, as the fervent demand for COVID-19 vaccinations gradually recedes, BioNTech is orchestrating a strategic evolution, broadening its scope beyond the confines of the pandemic response.
With an unwavering commitment to innovation and propelled by its pioneering mRNA technology, BioNTech now embarks on a bold expedition into the frontier of oncology. This audacious leap underscores the company's relentless pursuit of scientific excellence and its unwavering dedication to confronting some of the most formidable challenges in modern medicine.
As I dug deeper, BioNTech's endeavors revealed a robust and diversified vaccine development pipeline, poised to address an array of ailments that afflict humanity. Despite a subdued performance in the tumultuous landscape of 2024's financial markets, BioNTech remains a beacon of optimism. Its stock is poised for a resurgence. With an average price target soaring to $123, investors are tantalized by the prospect of a 34% upside from current valuation levels, underscoring the enduring faith in BioNTech's capacity to redefine the contours of biopharmaceutical excellence.
Market Info as of 04/04/2024
Market Cap: 21.59 billion USD
Current Stock Price: $90.78
52-week range: High - $131.52 & Low - $85.21
Earnings Per Share: $18.75 in 2023 (Fiscal Year) which is down 54.72% from 2022
Dividend Yield: N/A
O-O-O-O-Ozempic
Are we still on the Ozempic kick? Seems like just last week everyone was touting it as the next miracle drug and has been benefiting heavily from that (stock's up 25% YTD)
Personally, I feel like there are some long term side effects that we just don't know yet, but maybe that's just the conspiracy theorist in me.
But, if Ozempic is some miracle drug, would it make sense to buy in now? Imagine how much a drug like that would turn the entrie market and industry in its head.
VRTX - my current Biotech of choice
(biopharmaceutical, Boston) has been up 33.02% YoY, several earnings beats and FDA approvals recently.
I'm currently bullish on them based on FDA approvals on the pipeline on product and significant value investing opportunity at this stage.
Taken below quick notes in each business indicator:
Financials: In 2023, EBITDA reached $4 billion, with revenue hitting $9.87 billion and a $13.7 billion net cash position.
Growth: 2023 revenue rose by 11%, with a projected 8% increase in 2024.
Product: Trikafta/Kaftrio earned $6.04 billion in the U.S. and $3.83 billion internationally in 2023, treating cystic fibrosis.
Pipeline: Casgevy for sickle cell disease received approvals in multiple regions in 2023.
Valuation: Vertex's enterprise value stands at $101.38 billion, with an EBITDA multiple of 25.4.
My outlook is that it's a company with solid finances and promising products, offers potential in the biotech sector.