The healthcare sector is among the most innovative in the country, and the industry is in fact in an “R&D Renaissance” period, as drug makers are rolling out promising new products to treat cancer, multiple sclerosis, diabetes and other diseases, explains John Eade, analyst with Argus Research.
The industry invests heavily in Research & Development. Some companies spend as much as 30%-40% of sales on new products. Here are five drug companies in Argus coverage that we think have promising new product pipelines and are poised to benefit from hefty R&D investment. All are rated BUY.
Ligand Pharmaceuticals (LGND)
We recently initiated coverage of this mid-cap biotech company. We believe that LGND is on track to post solid earnings growth over the next several years, driven by its two primary partnered products of Promacta, a bone-marrow stimulant, and Kyprolis, for cancer.
LGND's product pipeline consisted of over 165 programs under license with more than 95 pharmaceutical and biotechnology companies. Over half of those programs were in clinical development or later, and greater than 10% were in the NDA-filing or marketed stage.
Merck (MRK)
Merck’s blockbuster immuno-oncology drug Keytruda is a $7 billion blockbuster. It recently received FDA approval for two additional cancer indications, bringing total U.S. indications to 12. We recently raised our target price to $85.
Regeneron Pharmaceuticals (REGN)
Regeneron is awaiting FDA decisions on new indications for Eylea, for eye conditions, and Dupixent, for high cholesterol, with target dates in August and October 2018, respectively. It also expects FDA approval of cemiplimab, a skin-cancer treatment, in October. The company has 17 product candidates that are currently in clinical development, including six in collaboration with Sanofi (SNY).
Amgen (AMGN)
Although the company is facing declining revenue for mature products such as Enbrel and Neulasta, it is working to offset this impact by developing new drugs, such as products for migraine, leukemia and skeletal-related events in multiple myeloma patients.
Novartis (NVS)
Novartis’ 'growth products' include Cosentyx for psoriasis and other conditions, Tasigna for leukemia, Jakavi for myelofibrosis, Entresto for chronic heart failure, bone-marrow stimulant Promacta/Revolade, Tafinlar and Mekinist for melanoma.
Others include Gilenya for multiple sclerosis and two recently launched products (Kisqali for advanced or metastatic breast cancer, and Kymriah, an immune-oncology drug for pediatric CAR-T cell therapy).Sales of these eight growth products rose on average 28% in 1Q and accounted for 36% of segment revenue.
