While the resurgence of COVID-19 cases is driving the demand for vaccines, booster shots, and other related solutions, an aging population is expected to be a key growth driver for the pharmaceutical industry. An increasing patient pool with a plethora of chronic diseases and continued innovations to treat critical conditions should keep driving the industry’s growth this year and beyond. 

According to a report by Research and Markets, the global pharmaceuticals market is expected to grow at an 8% CAGR from 2021 – 2025.

Given this backdrop, we think it could be wise to bet on shares of established pharmaceutical companies Johnson & Johnson (JNJ), AstraZeneca PLC (AZN), GlaxoSmithKline plc (GSK), and Astellas Pharma Inc. (ALPMY). They are rated A (Strong Buy) in our proprietary POWR Ratings system and possess a solid combination of stability and growth attributes.

Johnson & Johnson (JNJ)

One of the top players in the healthcare space, JNJ in New Brunswick, N.J., researches, develops, manufactures, and sells a range of products in the healthcare field worldwide. It operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices, and it is primarily known for its baby care products and COVID-19 vaccine.

The company announced on May 6 that the Food and Drug Administration (FDA) had approved TECNIS Synergy and TECNIS Synergy Toric II IOLs, and that Health Canada had also approved TECNIS Synergy Toric II IOLs. Because the product enables surgeons to address astigmatism at surgery, there could be increased demand for it in the coming months.

The company’s sales increased 27.1% year-over-year to $23.31 billion for its fiscal second quarter, ended June 30, 2021. JNJ’s gross profit grew 33.8% year-over-year to $15.72 billion, while its adjusted net earnings increased 49% year-over-year to $6.62 billion. Also, its adjusted EPS increased 48.5% year-over-year to $2.48.

For its fiscal year 2021, analysts expect JNJ’s EPS and revenue to increase 20.3% and 14.3%, respectively,  year-over-year to $9.66 and $94.37 billion. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 13.6% in price over the past year to close Friday’s trading session at $164.36.

JNJ’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

The stock has an A grade for Growth and Stability, and a B grade for Quality and Value. Within the Medical – Pharmaceuticals industry, JNJ is ranked #1 of 214 stocks. To see JNJ’s ratings for Momentum and Sentiment as well, click here.

Click here to checkout our Healthcare Sector Report for 2021

AstraZeneca PLC (AZN)

Headquartered in Cambridge, the United Kingdom, AZN discovers, develops, manufactures, and commercializes prescription medicines in oncology, cardiovascular, infection, neuroscience, and gastroenterology worldwide. Its marketed products include Tagrisso, Lynparza, Koselugo, and Lumoxiti.

Last week, AZN announced that it is planning to establish a next-generation active pharmaceutical ingredient manufacturing facility for small molecules near Dublin, Ireland, to ensure its global supply network is fit for future growth. This investment is expected to transform the development and commercialization of new medicines.

AZN’s revenue increased 31% year-over-year to $8.22 billion for its  fiscal second quarter, ended June 30, 2021. Its gross profit grew 14% year-over-year to $6.03 billion, while its total assets increased 22.9% year-over-year to $73.64 billion.

AZN’s EPS is expected to come in at $3.52 in its fiscal year 2021, representing a 75.1% year-over-year increase. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Also, the company’s revenue is expected to increase 51.8% year-over-year to $9.99 billion for the quarter ending September 30, 2021. Over the past nine months, the stock has gained 24.4% in price to close Friday’s trading session at $60.35.

AZN’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Value, Quality, Stability, and Sentiment.

Click here to see the additional POWR Rating for AZN (Momentum). AZN is ranked #9 in the Medical – Pharmaceuticals industry.

GlaxoSmithKline plc (GSK)

Based in Brentford, the United Kingdom, healthcare company GSK operates through two segments: Pharmaceuticals and Vaccines. The company’s main research area includes respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, vaccines, immuno-inflammation, oncology, and rare diseases.

On August 17, GSK announced that the FDA had approved a new indication for JEMPERLI, a programmed cell death receptor-1 blocking antibody, to treat adult patients with mismatch repair-deficient recurrent or advanced solid tumors. This is expected to boost the company’s revenue in the near-to-midterm.

GSK’s turnover increased 6% year-over-year to £8.09 billion ($11.06 billion) for the second quarter ended June 30, 2021. Its adjusted operating profit grew 23% year-over-year to £2.16 billion ($2.95 billion), while its adjusted earnings per share increased 46% year-over-year to 28.10p.

Analysts expect GSK’s EPS to increase 9.5% year-over-year to $3.12 in its fiscal year 2022. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Also, the company’s revenue is expected to increase 7.6% year-over-year to $12.01 billion for the quarter ending September 30, 2021. Over the past six months, the stock has gained 7% in price to close Friday’s trading session at $38.39.

It’s no surprise that GSK has an overall A rating, which equates to a Strong Buy in our POWR Rating system. The stock has an A grade for Growth and Value, and a B grade for Stability and Sentiment.

Click here to see GSK’s ratings for Quality and Momentum as well. GSK is ranked #3 in the Medical – Pharmaceuticals industry.

Astellas Pharma Inc. (ALPMY)

Headquartered in Tokyo, Japan, ALPMY is engaged in manufacturing, marketing, importing, and exporting pharmaceutical products worldwide. Its products include XTANDI, BETANIS, ZOSPATA, EVERENZO, and ENHOLTUMAB VEDOTIN. Moreover, the company has clinical trial collaborations with Merck & Company, Inc. (MRK) and CytomX Therapeutics, Inc. (CTMX).

On September 27 that Japan’s Ministry of Health, Labour, and Welfare had approved ALPMY’s PADCEV (enfortumab vedotin), the first and only antibody-drug conjugate approved in Japan for patients with radically unresectable urothelial carcinoma that has progressed after anti-cancer chemotherapy. So, the company could witness increased demand for the therapy  in the coming months.

ALPMY’s revenue increased 6.2% year-over-year to 326.14 billion yen ($2.94 million) for the fiscal first quarter ended June 30, 2021. Its gross profit grew 6.7% year-over-year to ¥263.91 billion ($2.38 billion). In addition, its total liabilities decreased 2.3% year-over-year to ¥866.59 billion ($7.82 billion).

ALPMY’s revenue is expected to increase 141.8% year-over-year to $12.13 billion in its current fiscal year ending March 31, 2022. Over the past nine months, the stock has gained 16.9% in price to close Friday’s trading session at $17.15.

ALPMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

In addition, it has an A grade for Value and Stability, and a B grade for Growth and Quality. We have also graded ALPMY for Sentiment and Momentum. Click here to access all ALPMY’s ratings. The stock is ranked #8 in the Medical – Pharmaceuticals industry.

Click here to checkout our Healthcare Sector Report for 2021

JNJ shares were trading at $163.15 per share on Monday afternoon, down $1.21 (-0.74%). Year-to-date, JNJ has gained 5.59%, versus a 19.63% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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