Pharmaceutical companies are a compelling option for long-term investors to consider at this time, especially given the important role that they continue to play in the global pandemic. The best big pharma stocks offer growth potential thanks to strong pipelines, steady income with dependable dividends, and the opportunity to invest in a business that can make a huge positive impact in the lives of millions of people. With the global pharmaceutical manufacturing market expected to grow at a compound annual growth rate of 13.7% from 2020 to 2027, many of these stocks are in a strong position to reward shareholders for years to come.
While some stocks in the pharmaceutical sector can be quite volatile given the unpredictability of FDA approvals, buying well-established businesses in the industry means that you own a stock that is essentially recession-proof. That’s because patients will spend money on the drugs they need regardless of what’s going on with the economy. If you are interested in some of the best choices in the sector, here are 3 healthy pharmaceutical stocks to buy now.
Pfizer, which is one of the world’s largest pharmaceutical companies, might just be the best vaccine play in the market right now. As you are likely already aware, the company’s COVID-19 vaccine has been authorized for emergency use by the FDA for use in individuals 16 years of age and older and is currently being distributed all over the world. Based on evidence from clinical trials, it is 95% effective in preventing COVID-19 illness and could be a sustainable revenue growth driver for the company going forward. Keep in mind that new virus variants might require additional booster shots and that the mRNA platform used in this vaccine could open the doors to new treatments for other conditions. Pfizer expects roughly $15 billion in 2021 revenue from the vaccine and is currently scaling up its manufacturing to deliver two billion doses by the end of 2021.
This pharmaceutical company also has a lot to offer in addition to the COVID-19 vaccine, as Pfizer’s diverse line of drugs including Prevnar, Ibrance, and Eliquis all generate billions in revenue every year. Additionally, Pfizer has several promising oncology drugs in its pipeline and recently spun off its Upjohn patent business, which are both things that could result in strong growth going forward. This stock currently offers a 4% dividend yield and is breaking out to 2021 highs at the moment, which means that now might be a great time to add shares.
Perhaps one of the highest-quality pharmaceutical stocks to consider owning at the moment is AbbVie, a research-based biopharmaceutical business and a member of the S&P 500. AbbVie has all of the great qualities that make pharmaceutical companies attractive, including a blockbuster drug called Humira that generates substantial free cash flows, a long history of paying dividends, and a strong pipeline of drugs to drive future growth. The company saw its full-year net revenues increase by 37.7% in 2020 to reach $45.8 billion, which confirms that this pharmaceutical powerhouse is dealing with challenges presented by the global pandemic well.
Humira is a drug that has been approved to treat 14 autoimmune diseases including Crohn’s disease and is sold in countries all over the world. The drug delivered $19.8 billion in net revenues for the company in FY 2020 but could face some competition in the U.S. when patents expire in 2023. The company is facing that problem head-on with promising new drugs like Skyrizi and Rinvoq and continues to diversify its business with intelligent acquisitions, including Botox-manufacturer Allergan plc which was purchased for $39.7 billion in 2020. AbbVie is also a dividend aristocrat and offers a dividend yield of 4.77%, making it a very strong option in the sector at this time.
Bristol-Meyers Squibb (NYSE:BMY)
Last but not least is Bristol-Myers Squibb, a global biopharmaceutical company that offers significant upside at current price levels. It’s a company that focuses on oncology, HIV, and cardiovascular conditions and is very skilled at identifying strong acquisition opportunities. For example, the company’s huge acquisition of Celgene instantly improved its pipeline and is expected to result in $2.5 billion in annual cost-synergy savings for the company by 2022. There’s also the company’s more recent purchase of heart treatment specialist MyoKardia that is already working out, as the FDA accepted its new drug application for cardiovascular drug mavacamten for review.
Bristol-Meyers Squibb has a wide economic moat thanks to patent protection that allows the company to price certain drugs at very profitable levels. What’s even better is that the patents on many of the company’s drugs are in place for years, which will allow Bristol-Meyers Squibb to research and develop new drugs for the next generation of profits. Finally, this pharma stock is a great buy because it offers a 2.97% dividend yield and has increased its dividend payments for 12 consecutive fiscal years, which is very attractive for investors seeking income.