3 Rock-Solid Pharma Stocks to Buy Now and Hold Forever

Almost every portfolio needs a few anchor stocks that tend to rise consistently over time, regardless of the mood of the market or the state of the economy. Because of the must-buy nature of life-saving drugs and the regular release of new and improved drugs, pharmaceutical stocks are a good place to look for the anchors that might be right for you.

In that regard, there are three solid pharma stocks in particular that are strong enough to buy today and resilient enough to hold for years, racking up growth along the way. Let’s take a look at each to appreciate why they could be great additions to your portfolio.

1. Abbott Laboratories

Abbott Laboratories (ABT -0.12%) provides the diversification and stability that most investors want from pharmaceutical stocks but often struggle to find. In the second quarter, its portfolio of pharmaceuticals brought in nearly $1.3 billion, up 8.1 percent year over year.

But drugs are not his only activity. It also manufactures diagnostics, medical nutrition products, medical devices and medical instruments such as cardiac stents. Hospitals need its assets to continue operating, even if it’s not trying to do anything fancy, making its revenue very recurring in nature as well as somewhat protecting the top line from the impact of recessions. That’s why Abbott is a company that won’t be going away anytime soon.

Over the last five years, normalized diluted earnings per share (EPS) for the last 12 months increased by 66.4% to $3.17. Thanks to the successful launch of the new Freestyle Libre continuous glucose monitoring (CGM) products, Wall Street analysts expect its next fiscal year EPS to grow further to $5.13.

It is particularly attractive to own due to its status as the Dividend King. While its forward yield of around 2% won’t make you rich, if you hold its shares for 10 years, assuming they’re similar to the last 10 years, you could see the annual dividend grow by 150%, which is what the proposition does. much sweeter.

2. AbbVie

AbbVie (ABBV -0.11%) is another pharmaceutical pioneer that actually spun off from Abbott Labs in 2013 so that Abbott’s core pharmaceutical development business wouldn’t be encumbered by its other segments. In short, this means that it is exposed to a greater risk of downside from its clinical trials, which may not achieve its goals, but is also exposed to more upside as a result of the premium associated with uncertainty.

In 2025 alone, it expects to win regulatory approval for at least five of its programs, in indications ranging from migraine prevention to myelodysplastic syndrome (MDS). During the same period, it plans to submit four more petitions to regulators for approval, setting it up for as many new approvals over the next year. As a result, analysts see its normalized diluted EPS exploding from $3.58 over the past four quarters to an annualized total of $13.47 two fiscal years from now.

Several of the main drivers of this growth are excellent illustrations of one of AbbVie’s core strengths: the ability to squeeze more and more sales of its marketed drugs through continued research and development (R&D) to get them approved to treat some additional ailments. Its drugs, Skyrizi and Rinvoq, are expected to bring in a combined $16 billion in 2024. By 2027, however, management is counting on the pair to bring in more than $27 billion from research efforts and ongoing development.

With such a strong demonstrated ability to continue expansions in its addressable markets — an ability that management is no doubt planning for well in advance — AbbVie can thus deliver good returns to shareholders over time, even if it only launches a few completely new products. .

3. Vertex Pharmaceuticals

Vertex Pharmaceuticals (VRTX 0.74%) it’s a solid investment because it has a mix of market dominance and diversification. Its main line of business, developing cystic fibrosis (CF) therapies, continues, with a new drug expected to be approved in early 2025, subject to regulatory approval. Outside of CF, it is also awaiting answers on its acute pain candidate, which regulators will decide on at the end of January.

Over the past five years alone, Vertex’s quarterly revenue has grown 178.5%, or $934.9 million. Even more impressive, its quarterly operating income rose 814% to over $2.6 billion.

The strategy is simple. Because it is the only drug developer with products that can treat the root causes of CF rather than just the symptoms, it has no competition for its market. It continuously develops and repackages already approved therapies for CF into new combinations, providing incremental improvements in efficacy along the way. It then channels some of the revenue into diversifying into new programs in other verticals, fueling its potential for faster growth.

No doubt he will try to develop a cure for CF one day. This will probably happen after its portfolio is sufficiently diversified between treating other diseases. And as the recent launch of its Casgevy cell therapy for sickle cell disease (SCD) and beta-thalassemia shows, it’s not afraid to take a cutting-edge approach wherever it competes. In biopharma, it’s hard to do better for long-term growth potential than Vertex.