Having a best-selling drug does not always guarantee that the drugmaker’s stock will perform well. While it can be a good investment in some situations, it can also pose a risk when investors worry about the company’s future growth prospects once the patent for the drug expires, particularly if the drug contributes significantly to the company’s revenue.
In 2023, the top three best-selling medications were derived from. Merck ( MRK 0.32% ) , AbbVie ( ABBV 0.26% ) , and Novo Nordisk ( NVO -1.58% ) Here is a more detailed examination of those successful movies, their earnings, future potential for growth, and an assessment of whether these stocks would be wise investment choices at present.
Merck’s Keytruda generated $25 billion in revenue.
In 2023, Merck’s leading drug Keytruda generated an impressive $25 billion in sales, representing nearly 42% of the company’s total revenue for that year. This cancer medication has proven to be highly effective in prolonging the lives of patients and has received approval from the Food and Drug Administration for various uses. Excluding foreign exchange effects, Keytruda experienced a 21% sales growth last year. Analysts anticipate further increase in sales, projecting it to reach $33 billion by 2027, before facing competition from biosimilars.
Merck is facing a major challenge as it approaches the expiration of its patents, which will lead to a decline in sales. To combat this, the company is focusing on developing new drugs and purchasing companies. One valuable asset in their portfolio is Winrevair, a treatment for pulmonary arterial hypertension, which has the potential to bring in $5 billion in revenue at its highest point.
Merck has several years remaining to introduce new products to the market, however, the expiration of Keytruda’s patent could pose a potential issue. Currently trading at a multiple of 14 times. projected income The stock is currently trading at a lower price. If you are willing to take on some risk and face uncertainties in the future, it might be a good idea to include it in your investment portfolio.
AbbVie’s Humira generated $14.4 billion in revenue.
AbbVie’s leading arthritis medication, Humira, generated significant revenue of $14.4 billion in 2023, accounting for 27% of the company’s total sales. However, due to increased competition, the drug has seen a decrease in sales of over 32% in the previous year.
On the other hand, the company has a few rapidly growing immunology medications called Skyrizi and Rinvoq, which management anticipates will generate higher peak sales than Humira when combined. These two drugs generated total sales of $11.7 billion last year.
Consequently, with the business focusing on its growth strategy, there is reduced risk. The company anticipates a strong growth rebound next year and predicts a high-single-digit annual growth rate thereafter. AbbVie stock is currently trading at 18 times its projected future earnings, presenting an opportunity for investors to purchase an undervalued stock with potential for long-term holding.
The revenue generated by Ozempic, a product by Novo Nordisk, reached $13.9 billion.
Ozempic is the only drug in the list that will not lose its patent protection for several years, particularly in the U.S. This is advantageous for Novo Nordisk as the drug experienced a significant revenue increase of 66% last year (excluding currency fluctuations) and contributed over 41% to the company’s overall sales.
Investors face a significant risk with the potential emergence of new weight loss therapies that could impact the sales growth of Ozempic. Despite being officially indicated for diabetes, patients have been using Ozempic for weight loss purposes off-label, as it has shown the ability to help individuals shed over 15% of their body weight on average. It is unlikely that Ozempic will maintain its leading position, especially with Novo Nordisk’s approval of Wegovy, a weight loss medication that could surpass Ozempic in the near future.
Regardless of the circumstances, Novo Nordisk remains a leading company. Medical sector shares Investing in this stock presents a valuable opportunity to benefit from the potential growth in weight loss and diabetes care sectors. Although the stock may seem expensive with a forward price-to-earnings multiple of 38, it remains a worthwhile investment due to the company’s strong growth prospects. Novo Nordisk anticipates a revenue growth of 22% to 28% this year, indicating significant potential for investors.
