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Powell's Picks in Pharma
05/15/2015 7:00 am EST
With new biotech-based drugs starting to appear, I believe the pharmaceutical industry is beginning another profitable growth cycle, suggests Jim Powell, editor of Global Changes & Opportunities Report.
If you have not yet invested in the industry, or if you would like to add to your holdings, these two companies also look very promising.
Bristol-Myers Squibb (BMY)
The outlook appears to be particularly good for Bristol-Myers Squibb. Opdivo, a new drug that fights lung cancer and melanoma, has the potential to be a blockbuster.
During its clinical trials, Opdivo results were so positive the FDA did something very unusual: it approved the drug before the trials were over. BMY also produces Yervoy, another anti-cancer drug that saw a 36% sales increase last year.
Sales for Eliquis, an anticoagulant, jumped from $146 million in 2013 to $774 million in 2014. Last quarter, two drugs that fight Hepatitis C rang up $270 million in Japan alone, the first country to approve their use. Several other products are also doing well and more are on the way.
With its new products and cost-cutting measures coming into the picture, I think Bristol-Myers Squibb will become a top-performer. This blue chip pharmaceutical company also pays a 2.30% dividend.
I think investors with a longer-term outlook should consider AstraZeneca, a more speculative pharmaceutical company based in London but traded on the NYSE.
More importantly for AstraZeneca's future is the company's advanced treatments that help the body's immune system fight cancer.
The company has over 30 clinical trials underway for its new discoveries. Even if only a handful of the trials are successful, the profits should be enormous.
Drug development and promotion costs are high and they have been cutting deeply into AZN's earnings. But that's par for the course with pharmaceutical companies that are investing heavily in R&D. I think the short-term costs are likely to create excellent longer-term benefits.
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