What are the best pharma stocks for long term investment? This is the question I like to address in this blog:
In my previous post, I have listed the top 49 pharma companies based on revenue. If you look at the long term performance (over 10 years) of some of the highly ranked companies, it is not very impressive. For instance, during the period March 1 2001 until Feb 28 2011, Pfizer (ranked 1, in 2008) shares dropped - 57.07% (check the graph below). If you have invested $100 in Pfizer on March 1st 2001, now your investment value has dropped to $ 42.93. The value of Pfizer stock today is $19.58. For short term investment Pfizer may be a good shot but long term investment, I won't go for Pfizer.
Some of the best performing companies over the past 10 years
Rank 1 : Mylan (+116.82%)
Rank 2 : Novartis (+35.10%)
Rank 3: Johnson & Johnson (+22.66%)
(within brackets: percentage change in stock value over 10 years)
Ten years is really long time to check the robustness and dynamics of the company. In my view, if a company can maintain or increase its value fighting though the ups and downs of markets over 10 years, it should be a reliable firm to invest our hard earned money. Check the performance graph below.
1. Mylan (MYL): Mylan Inc. (Mylan) is a global pharmaceutical company with a market cap of 10.07 B. It develops, licenses, manufactures, markets and distributes generic and branded generic pharmaceuticals, specialty pharmaceuticals and active pharmaceutical ingredients (APIs). It operates through two business segments: Generics and Specialty. The Generics Segment primarily develops, manufactures, sells and distributes generic or branded generic pharmaceutical products in tablet, capsule or transdermal patch form, as well as API.
Today's (03.03.11) stock value of MYL ranges from $ 22.82 - 23.21.
2. Novartis (NVS): Novartis AG is a Switzerland-based Pharmaceutical company and is engaged in the research, development, manufacture and marketing of healthcare products. The Company’s healthcare solutions portfolio includes medicines, preventive vaccines and diagnostic tools, generic pharmaceuticals and consumer health products. Its businesses are divided on a worldwide basis into five operating divisions: Pharmaceuticals, which comprises brand-name patented pharmaceuticals; Vaccines and Diagnostics, which focuses on human vaccines and blood-testing diagnostics; Sandoz, which consists of generic pharmaceuticals; Consumer Health, which includes over-the-counter medicines, animal health medicines, as well as Alcon, which is active in three major product areas: surgical, pharmaceuticals and consumer eye care.
Today's (03.03.11) stock value of NVS ranges from $ 57.09 - 57.48
3. Johnson & Johnson (JNJ): Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the health care field. The Company operates in three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.
Today's (03.03.11) stock value of NVS ranges from $ 60.81 - 61.20
Some people when they look at the Mylan performance, say the stocks are very volatile. However, this is not a concern for a long term investor. Stocks does goes through the ups and downs, but its average stock value has increased over long period of time.
One of the main strong point of Mylan over others is that, it is a generic player. When most of the pharmaceutical industries are witnessing major challenges like sluggish prescription trends, EU pricing pressure, pipeline failures and limited late-stage catalysts, generic pharma like Mylan are performing pretty well. 2012 will be a challenging year for many pharma companies. In 2011 products worth more than $30 billion are losing patent protection. This includes products like Lipitor, Plavix, Zyprexa and Levaquin. These products generated more than $15 billion in sales in 2010. For generic pharma 2012 will be a blessing with billions of out of patent drugs available for development and marketing.
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