Novartis (NYSE:NVS) has produced some uninspiring results on the markets. In five years, its share price has risen by just 8% while the Health Care Select Sector SPDR Fund has grown 50%. But that could change in 2020 and the years ahead as the underperforming stock's low price combined with some very bullish news could make a rally inevitable.

Speedy drug approval can help inclisiran hit the markets earlier

On Jan. 13, Novartis announced that its cholesterol drug inclisiran will be fast-tracked for review in Britain by the National Institute for Health and Care Excellence (NICE). If it's approved, that means patients in the U.K. with atherosclerosis, a form of heart disease that involves the buildup of plaque in the arteries, could have access to the drug as early as next year. It presents a significant opportunity in the region with the British health minister projecting that over the next decade the drug could help save 30,000 lives. 

The drug has a lot of potential and it's a key reason that Novartis paid $9.7 billion to acquire The Medicines Company. The deal closed on Jan. 6, making the drug officially Novartis' property. Before the deal closed, The Medicines Company submitted a new drug application for inclisiran in the U.S.  

Prescription medication.

Image source: Getty Images.

Novartis CEO Vas Narasimhan stated that "Novartis has a unique opportunity with inclisiran to open up a new chapter in the treatment of cardiovascular disease, the world's leading cause of mortality and disability." In the U.S. alone, heart disease is responsible for one in every four deaths, with nearly 650,000 Americans dying from it every year. 

Drug prices and competition could pose risks

The caveat for investors is that inclisiran doesn't have a price tag just yet, and that's no minor consideration. Rival drugs Praluent and Repatha have both run into challenges with insurance providers not wanting to cover their expensive prices. Initially, the drugs cost patients $14,000 per year; the companies have since reduced them to below $6,000. 

Expensive drug prices have also been the topic of political debates, and there could be pressure on drugmakers to bring prices down even further. However, even if the drugs are on par for price, inclisiran can still come out on top simply because patients only need to take it twice a year compared to Praluent and Repatha, which patients need to inject every month. 

Novartis projects that by 2030, annual sales for inclisiran will total between $4 billion and $8 billion. Neither Praluent nor Repatha have reached even the $1 billion mark in annual sales yet. 

Should investors buy the stock today?

There are no guarantees of how the risks will play out and how well inclisiran will do. But even without factoring in inclisiran, Novartis can still be a good healthcare stock to buy today.

With operating income of more than $8 billion in each of the past three years, Novartis' business continues to be strong. The one area that's been a challenge for the company has been its top line, where revenue grew by just 6% last year, from $50.1 billion to $53.2 billion. That's where adding inclisiran into the mix and helping drive long-term revenue growth can make the stock a lot more investable.

The company is still in a position to keep on growing via acquisition as Novartis generated $10.9 billion in free cash flow over the past 12 months. And with more than $8.7 billion in cash on its books as of Sept 30. 2019, it has lots of flexibility moving forward.

Currently, Novartis' stock trades at a forward price-to-earnings ratio of less than 17 and it has a PEG ratio of just under two. It's a decent valuation for a company that is still growing and a dividend stock that pays investors a dividend yield of around 3% per year. 

Overall, Novartis can be a relatively safe investment for dividend investors today and it has the potential for a lot more growth later on. The stock may not take off just yet, but over the long term, there's a great opportunity for investors to earn some strong returns from owning shares of Novartis.