Given its enviable record of top- and bottom-line growth has fueled over 30 years of dividend increases, Roche Holdings (NASDAQOTH:RHHBY) is among the top of its class when it comes to global biopharmaceutical companies.
In this clip from The Motley Fool's Industry Focus: Healthcare, analyst Kristine Harjes and contributor Todd Campbell explain why they think Roche Holdings deserves a gold medal for its performance.
A full transcript follows the video.
This video was recorded on Feb. 14, 2018.
Kristine Harjes: Given that one of the central draws of the Olympics is its international flavor, I wanted to end on one final competition for best non-U.S. healthcare stock. For this one, I am giving the gold to Roche, the Swiss drug maker. Roche is already very dominant, and it can boast that it has two of the five best-selling drugs from 2017. These were Rituxan, which brought in nearly $8 billion in 2017, and Herceptin, which generated over $7.5 billion. Rituxan treats both certain cancers and autoimmune diseases, which, it's pretty unique that it does both, and it makes up about 18% of overall sales for Roche. Herceptin, meanwhile, treats breast and gastric cancer and makes up about 17% of sales. And it's important to note that both of these drugs are facing biosimilar competition. But that doesn't worry me, much.
Roche also has a cancer drug called Avastin, which had 2017 sales of more than $7 billion, and it still has patent protection. I'm also particularly excited to watch their anti-PD-L1 drug, Tecentriq, which just hit the market in May of 2016. Their growth trajectory for this drug is pretty incredible. 2017 sales of about $500 million, already tripled from 2016 levels, which is, of course, not a fair comparison because 2016 didn't get the whole year of sales. But, going forward, estimates are for a CAGR, compound annual growth rate, of 77% through the year 2022, bringing it up to annual sales of nearly $5 billion. Roche also has one of the largest R&D budgets of any big pharma, and that should continue to be the case for the next several years. I was on the pipeline page of their website earlier, scrolling through, and I literally got a finger cramp. That's how much they have going on.
Todd Campbell: You know, Kristine, just to tag onto that, I saw that they had 25 label expansions or new drug approval in the E.U. and U.S. last year. 25!
Harjes: Actually, by my count, they have 31 just for Tecentriq. And some of them have expected filing dates this year, which is just incredible. And that's where you see that CAGR of 77% being driven by. Overall, worldwide prescription sales are expected to reach nearly $50 billion by 2022, which is a 4% CAGR. That's pretty good for a company of this size. You made a similar point when you were talking about Pfizer, but once you have such a large base, it's hard to grow much. So, that 4% actually puts them pretty close to the top of its class. It also has a dividend yield of 3.8%, which I think is just the icing on the cake to seal the deal that this is my gold medal finalist for international.
Campbell: And one of the things that's interesting, just to tag onto that, 5% growth since 2012, consistently. It's like, every year, 5% growth. So, maybe this isn't a company that's going to grow by leaps and bounds, but man, the consistency is fantastic!
Harjes: Yeah. I'm really impressed by what they're doing with their pipeline. Go check it out if you want to be as wowed as I was, but go easy on the scrolling finger.
Kristine Harjes has no position in any of the stocks mentioned. Todd Campbell owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.