John Eade, an analyst with Argus Research, chose defense contractor Lockheed Martin (LMT) as his Top Pick in 2019. He still views the stock — which rose 47% last year — as a suitable core holding in a diversified portfolio. For 2020, he turns to a favorite drug developer.
Novartis (NOV) has historically generated stable earnings from its diverse businesses, which include its pharmaceutical and Sandoz generics groups, and has a deep new drug pipeline.
The company completed a three-part deal in which it sold its vaccine business to GlaxoSmithKline (GSK), bought the Glaxo oncology business, and combined its consumer healthcare business in a joint venture with the Glaxo consumer healthcare business.
Now, the joint venture has been sold back to Glaxo. The transaction is helping Novartis to focus on its strengths — autoimmune disorders, oncology and generics, including biosimilars — while exiting noncore businesses.
Last April, the firm spun-off of its eye care division, Alcon (ALC). In conjunction with the spin-off, Novartis also announced its intention to continue paying a strong and growing annual dividend. In addition, management indicated that share buybacks will continue to be part of the mix to create shareholder value.
Over the next several years, we expect the Swiss company to launch new drugs in such critical areas as coronary disease, oncology and gene therapy.
* Zolgensma gene therapy was launched in the U.S. for treatment of spinal muscular atrophy in children under the age of two
* Piqray (alpelisib) launched for treatment of advanced breast cancer with a PIK3CA mutation
* Beovu (brolucizumab) launched in the U.S. for treatment of neovascular (wet) AMD.
* Ofatumumab (OMB157), a subcutaneous, potent, fully-human monoclonal antibody targeting CD20 positive B-cells, had positive Phase III trial results, and rolling submissions are planned to start in 4Q
The company's 'growth products' include Cosentyx for psoriasis and other conditions, Jakavi for myelofibrosis, Entresto for chronic heart failure, and bone marrow stimulant Promacta/Revolade, Tafinlar + Mekinist for melanoma.
Other recently launched products, Kisqali for advanced or metastatic breast cancer, Lutathera, for cancerous neuroendocrine tumors affecting the digestive tract, and Kymriah, a promising immune-oncology drug.
Many of the drugs under development are considered breakthrough treatments and should benefit from strong pricing power. The company's balance sheet is clean and management has a history of increasing the dividend annually.
