The pharmaceutical sector generates a huge $1.2 trillion of revenue globally, and the U.S. is by far the most lucrative country for drug makers in the world. Therefore, the profits of successful American pharmaceutical firms can be truly staggering. What’s even better for investors is that pharma firms’ profit growth can really be gargantuan because some successful drugs can generate literally tens of billions of dollars of revenue. As a result, when biotech companies develop blockbuster drugs, their stocks can explode higher. Now some biotech companies are using the power of artificial intelligence to meaningfully increase their chances of picking successful drug candidates and developing drugs much more quickly. Here are three millionaire maker drug stocks that will enable investors to generate big profits from this unique sector.
GSK (NYSE:GSK), the huge UK-based drug maker owns multiple, rapidly growing treatments and vaccines. It also has two potential drugs whose sales look poised to explode higher over the medium and the long term.
GSK’s revenue from vaccines jumped 18% last quarter versus the same period a year earlier, driven by Washington’s purchases of its rotavirus shot, Rotarix. There is now potential for other major nations to follow America’s example and buy additional doses of the vaccine. Further, the demand for the company’s cervical cancer vaccine, Cervarix, increased last quarter, and that trend is likely to continue. Finally, the sales of the company’s blockbuster shingles vaccine, Shingrix, soared 20% year-over-year (YOY) to £880 million.
Turning to treatments, the sales of GSK’s HIV drugs climbed 13% year-over-year to £1.58 billion, while its Specialty Medicines sales, excluding Covid-19 treatments, climbed 13% YOY to £2.52 billion.
GSK has two large growth drivers going forward. One of them is its RSV vaccine, Arexvy, which the company expects to be “transformational.” I agree because the company has a duopoly in the space, along with Pfizer (NYSE:PFE), and the two companies’ shots are launching roughly simultaneously.
Finally, in-line with my prior predictions, GSK reported that its cancer treatment, Jemperli, “grew strongly” last quarter, generating sales of £25 million. I continue to think that the drug, which is likely to be approved as an endometrial cancer treatment in the medium term by the Food and Drug Administration, will prove to be a blockbuster for GSK.
Exscientia (NASDAQ:EXAI) uses the magic of generative AI to identify molecules that can become successful drugs.
Encouragingly, six of the molecules identified by EXAI’s AI system have entered clinical trials, and a number of major drugmakers –including Bristol-Myers Squibb (NYSE:BMY) and Japan’s Sumitomo Dainippon Pharma are conducting clinical trials of its drug candidates. I believe that these companies would not waste time and money conducting these trials unless they had a signficant amount of optimism about EXAI’s molecules and technology.
Moreover, one of the company’s drugs — EXS21546, — a treatment for certain types of lung and renal cancers –“has demonstrated encouraging outcomes in preclinical studies,” Seeking Alpha columnist The Wealth Wizard reported in May.
I believe that the current $918.5 million market capitalization of EXAI stock far understates its medium- and long-term potential.
Japanese drug maker Eisai (OTCMKTS:ESAIY) appears to have a blockbuster Alzheimer’s treatment on its hands, and I believe that the company’s market capitalization of $18 billion severely underestimates how lucrative the drug will be for the company.
Eisai has partnered with U.S. drug maker Biogen (NASDAQ:BIIB) on the treatment.
Of course, Alzheimer’s is one of the biggest killers in the world, completely destroying patients’ quality of life for many years and devastating for their loved ones. Moreover, no effective treatment for the disease has been found until now, and taxpayers have to pay a great deal to care for Alzheimer’s patients.
Given all of these points, I expect insurers to pay a very high price for Eisai’s drug, which “slowed (the) cognitive and functional decline in Alzheimer’s patients by as much as 27%” in a clinical trial.
The Food and Drug Administration earlier this month approved the company’s drug, and Medicare had indicated that it would provide coverage of the treatment if it was approved by the FDA.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.