As the Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the branded pharmaceuticals industry, including Merck (NYSE: MRK) and its peers.
Looking ahead, the branded pharmaceutical 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.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Merck (NYSE: MRK)
With roots dating back to 1891 and a portfolio that includes the blockbuster cancer immunotherapy Keytruda, Merck (NYSE: MRK) develops and sells prescription medicines, vaccines, and animal health products across oncology, infectious diseases, cardiovascular, and other therapeutic areas.
Merck reported revenues of $15.53 billion, down 1.6% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a strong quarter for the company with a solid beat of analysts’ constant currency revenue estimates and a decent beat of analysts’ EPS estimates.
“Our company made strong progress to start the year, with increasing contributions from our newer commercialized medicines and vaccines and continued advancement of our pipeline,” said Robert M. Davis, chairman and chief executive officer, Merck.
Interestingly, the stock is up 3.6% since reporting and currently trades at $81.50.
We think Merck is a good business, but is it a buy today? Read our full report 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 a solid beat of analysts’ EPS estimates and full-year revenue guidance slightly topping analysts’ expectations.
Bristol-Myers Squibb scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3% since reporting. It currently trades at $47.07.
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 frustrated with the poor quality of medicines, 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 and a miss of analysts’ EPS estimates.
As expected, the stock is down 13% since the results and currently trades at $779.69.
Read our full analysis of Eli Lilly’s results here.
Organon (NYSE: OGN)
Spun off from Merck in 2021 to create a company dedicated to addressing unmet needs in women's health, Organon (NYSE: OGN) is a global healthcare company focused on improving women's health through prescription therapies, medical devices, biosimilars, and established medicines.
Organon reported revenues of $1.51 billion, down 6.7% year on year. This result surpassed analysts’ expectations by 0.6%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ EPS estimates.
The stock is down 22.5% since reporting and currently trades at $10.
Read our full, actionable report on Organon 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 print 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 1.1% since reporting and currently trades at $32.09.
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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