Looking to the Pharmaceutical Industry for the Long Term The pharmaceutical industry has gone through some really tough times, but things could change soon.
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Efficient stock trading software can help people trading stocks online to make the right decisions by understanding the market well and also anticipating future market trends and lucrative industries. The pharmaceutical industry has been one of the hardest hit in 2016. As the rest of the market posted double-digit gains, the pharma industry struggled. Various factors have contributed to this. But leaving all that behind, pharmaceuticals are on recovery mode. While there is uncertainty in the near-term, there are positives when demographics are taken into account. Positive Factors for the Pharmaceutical Industry According to the Administration for Community Living (ACL), seniors 65 years of age and more could make up 16% of the American population by 2020. And the Bureau of Labor Statistics (BLS), in its consumer expenditures survey, claims that seniors tend to spend over double the amount youngsters spend on pharmaceuticals. Senior citizens spend $672 on an average each year for drugs while other households only spend $312. Faster approvals of drugs by the FDA are expected if Scott Gottlieb, President Trump’s choice for FDA commissioner, is approved. There are two pharmaceutical companies that could benefit massively from these factors – Novartis AG ($NVS) and Roche Holding ($RHHBY). Novartis Novartis had over 200 projects under clinical development at the end of last year. Its Ribociclib has been provided with priority review as first-line advanced breast cancer treatment for women in the post-menopausal stage. The company has also applied to the European Medicines Agency (EMA)for reviewing Ribociclib. The Phase III trials have been encouraging since they indicated a major rise in the survival rate for the various patient subgroups tested. The company has been on a partnership and acquisition spree lately.
While
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Ionis
Pharmaceuticals, it has acquired Ziarco and Encore Vision. Shares of Novartis are 4% higher than last year, trading for only 16 times earnings. Earnings could be flat in the coming four quarters though they could get higher on the potential of the company’s products in the pipeline. Roche Holding Roche Holding was given five breakthrough therapy designations by the FDA last year. It has over 18,000 employees handling research and development and has recently www.tradezero.co
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launched a number of new cancer drugs. Its drug for cancer immunotherapy treatment, Tecentriq, was the first advanced bladder cancer drug to receive marketing clearance in the US in over 30 years. In April there would be a final decision by the FDA on the marketing approval of the drug. It has a breakthrough drug for multiple sclerosis, Ocrevus, which is expected to top $4 billion in sales by 2022. It is to be launched soon this year following the expected approval by the Prescription Drug User Fee Act (PDUFA). All these factors have contributed to a positive outlook, and the shares have been able to gain 4.7% over last year though they still trade at only 17.2 times trailing earnings while the industry average is 27.1 times earnings. But earnings are expected to grow by 3.8% over 2018 to ensure earnings of $1.91 per share. This could raise the share value by 19%.
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