Wrapping up Q1 earnings, we look at the numbers and key takeaways for the branded pharmaceuticals stocks, including Pfizer (NYSE: PFE) and its peers.
The branded pharmaceutical industry relies on a high-cost, high-reward business model, driven by substantial investments in research and development to create innovative, patent-protected drugs. Successful products can generate significant revenue streams over their patent life, and the larger a roster of drugs, the stronger a moat a company enjoys. However, the business model is inherently risky, with high failure rates during clinical trials, lengthy regulatory approval processes, and intense competition from generic and biosimilar manufacturers once patents expire. These challenges, combined with scrutiny over drug pricing, create a complex operating environment. Looking ahead, the industry is positioned for tailwinds from advancements in precision medicine, increasing adoption of AI to enhance drug development efficiency, and growing global demand for treatments addressing chronic and rare diseases. However, headwinds include heightened regulatory scrutiny, pricing pressures from governments and insurers, and the looming patent cliffs for key blockbuster drugs. Patent cliffs bring about competition from generics, forcing branded pharmaceutical companies back to the drawing board to find the next big thing.
The 10 branded pharmaceuticals stocks we track reported a satisfactory Q1. As a group, revenues were in line with analysts’ consensus estimates.
While some branded pharmaceuticals stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.9% since the latest earnings results.
Pfizer (NYSE: PFE)
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE: PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Pfizer reported revenues of $13.72 billion, down 7.8% year on year. This print fell short of analysts’ expectations by 1.6%. Overall, it was a mixed quarter for the company with a solid beat of analysts’ organic revenue estimates but a miss of analysts’ full-year EPS guidance estimates.
Pfizer delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 2% since reporting and currently trades at $23.50.
Read our full report on Pfizer here, it’s free.
Best Q1: Bristol-Myers Squibb (NYSE: BMY)
With roots dating back to 1887 and a transformative merger in 1989 that gave the company its current name, Bristol-Myers Squibb (NYSE: BMY) discovers, develops, and markets prescription medications for serious diseases including cancer, blood disorders, immunological conditions, and cardiovascular diseases.
Bristol-Myers Squibb reported revenues of $11.2 billion, down 5.6% year on year, outperforming analysts’ expectations by 3.9%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates and full-year revenue guidance slightly topping analysts’ expectations.
Bristol-Myers Squibb achieved the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $48.29.
Is now the time to buy Bristol-Myers Squibb? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Eli Lilly (NYSE: LLY)
Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Eli Lilly reported revenues of $12.73 billion, up 45.2% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a slower quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 17.4% since the results and currently trades at $739.70.
Read our full analysis of Eli Lilly’s results here.
Royalty Pharma (NASDAQ: RPRX)
Pioneering a unique business model in the pharmaceutical industry since 1996, Royalty Pharma (NASDAQ: RPRX) acquires rights to receive portions of sales from successful biopharmaceutical products, providing funding to drug developers without conducting research itself.
Royalty Pharma reported revenues of $568.2 million, flat year on year. This print met analysts’ expectations. It was a satisfactory quarter as it also recorded an impressive beat of analysts’ EPS estimates.
The stock is up 1.3% since reporting and currently trades at $33.21.
Read our full, actionable report on Royalty Pharma here, it’s free.
Supernus Pharmaceuticals (NASDAQ: SUPN)
With a diverse portfolio of eight FDA-approved medications targeting neurological conditions, Supernus Pharmaceuticals (NASDAQ: SUPN) develops and markets treatments for central nervous system disorders including epilepsy, ADHD, Parkinson's disease, and migraine.
Supernus Pharmaceuticals reported revenues of $149.8 million, up 4.3% year on year. This number beat analysts’ expectations by 1.3%. Aside from that, it was a slower quarter as it logged full-year operating income guidance missing analysts’ expectations.
Supernus Pharmaceuticals had the weakest full-year guidance update among its peers. The stock is down 2.3% since reporting and currently trades at $31.70.
Read our full, actionable report on Supernus Pharmaceuticals here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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