Bristol-Myers Squibb Co (BMY), Johnson & Johnson (JNJ): Buy These Leading Pharma Companies

A recent EvaluatePharma report estimated the market for prescribed drugs will increase at an annual rate of 3.8% to $895 billion from 2012 to 2018. New patents and improvement in research and development will bolster companies’ portfolios, while a growing population and better access to healthcare will be key factors driving the market size for drugs. Pharmaceutical companies are working hard to capitalize on the growing market. Three such pharmaceutical companies should be of interest to investors. These companies have promising drugs for the treatment of cancer, heart disease, and immunologic disorders.

The next blockbuster drug underway

Oncologic drugs contributed 13.8% to Bristol-Myers Squibb Co (NYSE:BMY) revenue last year. The company has three drugs in this business segment, Yervoy, Sprycel, and Erbitux. Yervoy treats skin cancer and generated revenue of around $721 million last year. This drug has high efficiency in treating Melanoma, and it is widely used to treat inoperable patients.

In addition, Bristol-Myers Squibb Co (NYSE:BMY)’s new drug under development, Nivolumab, showed positive results with a response rate of 31% when tested with Yervoy in its second trial stage. The company expects that the combination of both drugs will provide a breakthrough in the treatment of melanoma. Therefore, it estimates that the sales of Yervoy will increase and reach $1.06 billion in 2013.

Plavix was a Bristol-Myers Squibb Co (NYSE:BMY) blockbuster drug with revenue of $2.54 billion in the last year. Its patent expired last year and generic drugs flooded the market. As a result of the competition from generic drugs, sales of the Plavix fell around 65%, which can result in significantly lower revenue of $130 million this year.

To offset the plunging revenue, Bristol-Myers Squibb Co (NYSE:BMY) developed the anti-coagulant drug “Eliquis” jointly with Pfizer Inc. (NYSE:PFE). This drug received FDA approval in late 2012 and generated revenue of $2 million last year, and it is expected to reach around $242 million this year.

In the test, Eliquis reduced the stroke risk compared to Warfarin, a competitor of Eliquis. Eliquis showed stroke risk of 1.27% per year, whereas Warfarin had risk of 1.60% per year. With this competitive advantage, analysts anticipate that this drug can achieve peak revenue of around $3.5 billion by the end of 2020.

Pfizer Inc. (NYSE:PFE) will also benefit from the approval of Eliquis, as this drug achieved average sales of $26 million in the first two months after the launch. The clinical profile of Eliquis is superior to its competitors in this segment, and it also received approval for the treatment of hypertension. Due to its dual benefits, this drug has the potential to generate sales of $121 million in the current fiscal year.

Strong performance is here to stay

Johnson & Johnson (NYSE:JNJ) announced its second quarter results this month, and it achieved 8.5% year-over-year sales growth to $17.9 billion. With the standout performance of Remicade, its sales increased in the pharmaceutical business. Remicade treats arthritis, certain bowel diseases, and skin diseases as well.