Top 14 biotech stocks to watch
There is a variety of biotech stocks for investors to choose from. We have a look at the biggest listed biotech companies and their prospects.
Largest biotech stocks
Below are 14 of the biggest publicly-listed biotech companies. You can read about how to invest in and analyse the biotech sector before deciding what stocks to add to your portfolio.
Amgen: a giant without its share of problems
Amgen is one of the world’s largest biotech companies that already has a suite of approved medicines and treatments. It has eight core products – treating everything from arthritis to anaemia - currently for sale with no single one accounting for more than 22% of total revenue. However, the company does generate a staggering 96% of all revenue from just three wholesale customers: AmerisourceBergen, McKesson and Cardinal Health. This means it may have a varied product portfolio but is heavily reliant on a handful of customers.
Plus, while overall product sales have continued to grow Amgen has admitted some of its more mature products are facing increased competition, with sales of four of its top seven in decline. The company’s pipeline of new products is therefore significant, with seven products currently undergoing Phase III trials looking to provide treatments for the likes of Alzheimer’s, heart failure and asthma. It has another three products in Phase II trials and 22 more in Phase I.
Amgen has spent $809 million since 2014 on restructuring and yielded $1.9 billion of savings. A $100 invested in Amgen in 2014 would have produced a total return of $192 by the end of 2018, versus just $150 from the S&P 500. The dividend has consistently grown over the years, from $2.44 in 2014 to $5.28 last year, in addition to $17.9 billion worth of shares being repurchased.
Amgen results: 2018 (YoY % change)
|Market cap||$116 billion|
|Research and development (R&D) spend||$3.7 billion||4.9%|
|R&D spend as % of revenue||15.6%|
|Pre-tax profit||$9.5 billion||-0.5%|
Gilead Sciences: a new leader tasked with turnaround
The new chief executive of Gilead, Daniel O’Day, took over at the start of March 2019 to turn the company around following several tough years. Both top and bottom lines declined last year, mainly because sales of its hepatitis C products plunged to $3.7 billion from $9.1 billion because of lower prices and volumes as a result of increased competition, although it says sales will stabilise going forward. Gilead has said it could return to growth in 2019, forecasting product sales will be broadly flat at $21.3 billion to $21.8 billion versus $21.7 billion in 2018 but predicting a higher product gross margin of 85%-87% compared to just 77.4% last year (having tightened from 83% in 2017). Sales of its HIV products (its largest franchise) have also continued to grow and should continue that trend following solid starts for new products like Bikarvy.
Gilead is another rare example of a dividend-paying biotech stock, having raised its annual payout to $2.28 last year from $2.08. It currently boasts a higher dividend yield than its rival Amgen, but it has grown its dividend by 47% over the last five years compared to Amgen raising its payout by 84%.
Gilead results: 2018 (YoY % change)
|Market cap||$81 billion|
|R&D spend||$5 billion||34%|
|R&D spend as % of revenue||22.6%|
|Pre-tax profit||$7.8 billion||-42%|
Celgene: about to merge with Bristol-Myers Squibb
Celgene expects to complete its merger with pharmaceutical giant Bristol-Myers Squibb by the end of September this year. The deal, announced in January, will see Celgene shareholders receive $50 in cash and one Bristol-Myers share (plus one tradeable CVR, giving a total equivalent value of $102.43 per share), giving Celgene investors 31% of the new enlarged entity. The pair believe together they can generate $45 billion in free cashflow within three years and deliver $2.5 billion of run-rate cost-savings by 2022. Bristol-Myers has said Celgene will be 40% accretive to its standalone earnings per share in the first full year of ownership.
The enlarged entity says it will have leading positions in oncology and cardiovascular treatments with a top five position in immunology and inflammation treatments. Celgene’s speciality is in treatments for cancer or inflammatory conditions. The figures below are for Celgene as an independent business:
Celgene results: 2018 (YoY % change)
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