The global pharmaceutical sector is expected to grow steadily in the long run, owing to an aging population’s increasing medical needs, consistent breakthroughs in treating chronic illnesses, and the adoption of enhanced technologies such as AI.
So, quality pharma stocks Sanofi (SNY), Takeda Pharmaceutical Company Limited (TAK), and Calliditas Therapeutics AB (publ) (CALT) could be ideal watchlist additions.
According to U.S. pharmaceutical industry statistics, the U.S. will have a 43.72% market share in the global pharma industry in 2023. Also, the U.S. is expected to spend $605 to $635 billion on medicine by 2025.
On the other hand, the global generative AI in the pharma market is expected to grow at a 31.2% CAGR until 2032. The pharmaceutical industry is being transformed by generative AI, which enables faster and more efficient drug discovery and development.
Generative AI employs machine learning and deep learning to create new compounds, design medications, and anticipate their properties, thereby assisting in resolving classic drug discovery challenges.
Furthermore, the global pharmaceutical market is expected to grow at 5.7% CAGR until 2028. Investors’ interest in pharma stocks is evident from VanEck Vectors Pharmaceutical ETF’s (PPH) 4.6% returns over the past three months.
Let us look deeper into the fundamentals of the featured stocks.
Sanofi (SNY)
SNY is engaged in the research, development, manufacture, and marketing of therapeutic solutions globally. The company operates through the three broad segments of Pharmaceuticals; Vaccines; and Consumer Healthcare. It is headquartered in Paris, France.
SNY’s forward EV/EBIT multiple of 9.85 is 40.1% lower than the industry average of 16.46. Its forward non-GAAP P/E multiple of 11.42 is 42.5% lower than the industry average of 19.85.
SNY’s trailing-12-month EBITDA margin of 31.16% is 869.3% higher than the industry average of 3.21%. Its trailing-12-month gross profit margin of 69.93% is 25.4% higher than the industry average of 55.77%.
For the fiscal first quarter that ended March 31, 2023, SNY’s net sales increased 5.7% year-over-year to €10.22 billion ($11.27 billion). Its gross profit increased 8.5% year-over-year to €7.78 billion ($8.58 billion). The company’s net business income and EPS increased 11.3% from its prior-year quarter to €2.70 billion ($2.98 billion) and €2.16 per share, respectively.
The consensus revenue estimate of $50.60 billion for the year ending December 2024 represents a 5.2% increase year-over-year. Its EPS is expected to grow 9.3% year-over-year to $4.88 for the same period. SNY’s shares have gained 23% over the past nine months to close the last trading session at $51.01.
SNY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SNY has an A grade for Value and a B for Stability. It is ranked #24 out of 169 stocks in the Medical – Pharmaceuticals industry. Click here for the additional POWR Ratings for Quality, Growth, Momentum, and Sentiment for SNY.
Takeda Pharmaceutical Company Limited (TAK)
Headquartered in Tokyo, Japan, TAK engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products in Japan, the United States, Europe, Canada, Latin America, Russia, the rest of Asia, and internationally. It offers pharmaceutical products in gastroenterology, rare diseases, plasma-derived therapies, oncology, and neuroscience.
TAK’s forward Price/Book multiple of 1.17 is 57.9% lower than the industry average of 2.78 Its forward Price/Sales multiple of 1.83 is 58.6% lower than the industry average of 4.43.
TAK’s trailing-12-month EBITDA margin of 30.37% is 844.9% higher than the industry average of 3.21%. Its trailing-12-month gross profit margin of 69.11% is 23.9% higher than the industry average of 55.77%.
For the fiscal year ended March 31, 2023, TAK’s revenue increased 12.8% year-over-year to ¥4.03 trillion ($28.87 billion). Also, its operating income increased 6.4% from the year-ago value to ¥490.51 billion ($3.52 million).
The company’s net income amounted to ¥317.04 billion ($2.27 million) and ¥204.29 per share, representing an increase of 37.7% and 38.8% from the prior-year period, respectively.
Street expects TAK’s revenue to increase 488.2% year-over-year to $27.63 billion for the year ending March 2024. Its EPS is expected to come in at $0.32 for the same period. Over the past year, the stock has gained 20% to close the last trading session at $16.07.
It’s no surprise that TAK has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Stability. It is ranked #27 in the same industry.
Beyond what is stated above, we’ve also rated TAK for Growth, Momentum, Sentiment, and Quality. Get all TAK ratings here.
Calliditas Therapeutics AB (publ) (CALT)
Headquartered in Stockholm, Sweden, CALT is a commercial-stage specialty pharmaceutical company focused on identifying, developing, and commercializing pharmaceuticals products for treatments in orphan indications with an initial focus on renal and hepatic diseases.
CALT’s forward EV/Sales multiple of 3.25 is 15.9% lower than the industry average of 3.87. Its forward Price/Sales multiple of 3.43 is 22.4% lower than the industry average of 4.43.
CALT’s trailing-12-month gross profit margin of 97.50% is 74.8% higher than the industry average of 55.77%. Its trailing-12-month asset turnover ratio of 0.60x is 71.5% higher than the industry average of 0.35x.
In the first quarter that ended March 31, 2023, CALT’s net sales increased 284.8% year-over-year to SEK191.35 million ($18.17 million). Its gross profit increased 271.2% from the year-ago value to SEK182.32 ($17.31 million).
The company’s total current assets and total assets amounted to SEK1.29 billion and SEK1.79 billion ($115.80 million and $169.83 million) for the period that ended March 31, 2023, compared to SEK896.48 million and SEK1.34 billion ($85.11 million and $127.64 million) for the period ended March 31, 2022, respectively.
Analysts expect CALT’s revenue to increase 129.7% year-over-year to $313.02 billion for the year ending December 2024. Its EPS is expected to come in at $2.75 for the same period. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 5.9% over the past nine months to close the last trading session at $17.23.
CALT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #29 in the same industry. It has a B for Growth and Value. To see additional CALT’s ratings for Sentiment, Stability, Momentum and Quality, click here.
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SNY shares were trading at $50.58 per share on Tuesday afternoon, down $0.43 (-0.84%). Year-to-date, SNY has gained 7.25%, versus a 14.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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