AbbVie Inc (ABBV), Amgen, Inc. (AMGN): Do Generic Drugs Drastically Alter Market Dynamics?

However, AbbVie Inc (NYSE:ABBV) and Amgen, Inc. (NASDAQ:AMGN) have a range of products in the market and continue to launch new products. On June 13, 2013, the FDA approved a new indication (denosumab) for Amgen, Inc. (NASDAQ:AMGN)’s Xgeva for treatment of patients with giant cell bone tumors. A few days earlier, the company reported top-line Phase III results for trebananib, its candidate for treatment of ovarian cancer, and positive results from Phase III trials for talimogene laherparepvec for metastatic cancer.

AbbVie Inc (NYSE:ABBV) has more drugs in the market than one can count, and an equally strong pipeline of candidates for treatment of hepatitis C virus, rheumatoid arthritis, psoriasis, uterine fibroids, breast and other cancers. AbbVie Inc (NYSE:ABBV) may also develop an oral HCV treatment with its interferon-free cocktail of three drugs.

Both AbbVie Inc (NYSE:ABBV) and Amgen, Inc. (NASDAQ:AMGN) are dividend-paying companies – Abbvie yields 3.71% and Amgen, Inc. (NASDAQ:AMGN) 1.88%, which makes them suitable for inclusion in an income portfolio. Things may however change if the government goes soft on QE. If that happens, interest rates are likely to go up, and these payouts may not look so attractive then.

A note of caution

On the other side, the benefits from new launches need to be looked at in the backdrop of the nullifying effect of revenue loss from patent expirations.

Both Amgen, Inc. (NASDAQ:AMGN) and Abbvie have lost more than 5% in the last one month, which may lure investors to buy. At the same time, considering that the healthcare sector has had a good run since the last one year, I would suggest playing these two stocks with care, and waiting for a more substantial correction.

The article Do Generic Drugs Drastically Alter Market Dynamics? originally appeared on Fool.com and is written by Kanak Kanti.

Dr.Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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