The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Royalty Pharma (NASDAQ: RPRX) and the rest of the branded pharmaceuticals stocks fared in Q4.
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 11 branded pharmaceuticals stocks we track reported a mixed Q4. As a group, revenues beat analysts’ consensus estimates by 1.3%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
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 $594 million, flat year on year. This print fell short of analysts’ expectations by 1.9%. Overall, it was a slower quarter for the company with some shareholders anticipating a better outcome.
“We had an incredibly successful 2024, delivering double-digit growth in Royalty Receipts, which was significantly above our initial guidance, and deploying $2.8 billion of capital on value-enhancing royalties” said Pablo Legorreta, Royalty Pharma’s founder and Chief Executive Officer.
The stock is up 7.4% since reporting and currently trades at $34.09.
Read our full report on Royalty Pharma here, it’s free.
Best Q4: 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 $174.2 million, up 6% year on year, outperforming analysts’ expectations by 12.2%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates.
Supernus Pharmaceuticals delivered 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 $32.59.
Is now the time to buy Supernus Pharmaceuticals? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: Zoetis (NYSE: ZTS)
Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE: ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.
Zoetis reported revenues of $2.32 billion, up 4.7% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 6.2% since the results and currently trades at $163.16.
Read our full analysis of Zoetis’s results here.
Collegium Pharmaceutical (NASDAQ: COLL)
Pioneering abuse-deterrent technology in a field plagued by addiction concerns, Collegium Pharmaceutical (NASDAQ: COLL) develops and markets specialty medications for treating moderate to severe pain, including abuse-deterrent opioid formulations.
Collegium Pharmaceutical reported revenues of $181.9 million, up 21.5% year on year. This number beat analysts’ expectations by 1%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ EPS estimates.
The stock is up 6.9% since reporting and currently trades at $30.39.
Read our full, actionable report on Collegium Pharmaceutical here, it’s free.
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 $1.59 billion, flat year on year. This print surpassed analysts’ expectations by 0.9%. More broadly, it was a slower quarter as it recorded full-year revenue guidance missing analysts’ expectations.
Organon had the slowest revenue growth among its peers. The stock is up 5.7% since reporting and currently trades at $15.53.
Read our full, actionable report on Organon here, it’s free.
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