Internationally operating pharmaceutical organizations that offer high-yield dividends to their stakeholders are ideal investment choices. The pharmaceutical industry can provide profitable returns, thanks to the perpetual demand for medicines and vaccines, owing to the presence of various diseases and infections. This creates an inherent pricing power within the industry, which can increase revenue and profits in the long term.
Let’s look at these two pharmaceutical corporations that arguably present the most attractive investment opportunity in the industry: substantial product collections and promising product development pipelines.
AstraZeneca
A-Pillar in the Pharmaceutical Industry Founded in 1913 in Sweden, AstraZeneca (NASDAQ: AZN) has built an impressive corporate history spanning over a century. Now based in the U.K., the company has launched numerous drugs with tremendous commercial success.
AstraZeneca’s product portfolio boasts 12 medicines, each poised to generate more than $1 billion in annual sales in 2023 across various business sectors like oncology, cardiovascular/renal/metabolic, respiratory, immunology, and rare diseases. Its most notable medicines include Tagrisso and Imfinzi for cancer and Farxiga for cardiovascular/renal/metabolic treatment.
The robust product portfolio contributes to AstraZeneca’s whopping $226 billion market capitalization, placing it among the top 10 pharmaceutical companies worldwide and the second largest internationally-based drug manufacturer, just behind Novartis. With an impressive 24% of its Q1 2023 revenue invested in research and development, funding over 170 pipeline projects, AstraZeneca shows promise of maintaining its industry leadership.
Analysts expect AstraZeneca’s extensive product range and pipeline to drive a 13.2% annual non-GAAP (core) EPS growth over the next five years, twice the predicted industry average growth rate of 6.6%.
Investors can also benefit from AstraZeneca’s 2% dividend yield, significantly higher than the S&P 500 index’s 1.6% yield. The dividend payout ratio in 2023 is anticipated to be slightly above 39%. Considering its superior growth profile, AstraZeneca’s forward P/E ratio of 17.3 is a bargain compared to the industry average of 13.2.
AstraZeneca presents a compelling case for growth, income, and value investors.
Sanofi
An Undervalued Growth Stock Like AstraZeneca, Sanofi (NASDAQ: SNY) holds a rich corporate history, with its oldest part dating back to the 19th century. With a market cap of $129 billion, this French company is the world’s third-largest non-U.S. drug manufacturer.
Sanofi exhibits strength across the board, with seven medicines and vaccines expected to reach blockbuster or mega-blockbuster status in 2023. The sales of four of these seven products, led by Dupixent, grew at a mid-single-digit to double-digit rate in Q1, suggesting profitable sales and earnings growth.
In the medium to long term, Sanofi has numerous growth triggers. Its recent $2.9 billion acquisition of Provention Bio and its type 1 diabetes-delaying treatment Tzield highlights its growth strategy via strategic investments. Additionally, its respiratory syncytial virus (RSV) vaccine candidate, co-owned with AstraZeneca, could generate up to $3 billion in annual revenue for both companies.
Sanofi has over 70 projects in different clinical development stages, leading analysts to project an annual earnings growth of 7.4% over the next five years.
The company offers an attractive 3.8% dividend yield, considerably more generous than the S&P 500 index. This high starting income seems secure, with a dividend payout ratio of about 39% expected in the next 12 months. Sanofi’s forward P/E ratio of 5.8 is significantly below the industry average of 13.2, making the stock a compelling buy.
AstraZeneca and Sanofi present compelling investment opportunities due to their robust product portfolios, promising pipelines, and attractive dividend yields. They show resilience and growth potential in a market requiring medical advancements. With their proven track records and good growth rates, these biotech stocks should be on every investor’s radar. Whether you’re a value investor, growth investor, or income investor, these biotech titans check all the right boxes.
