The longest bull market in history, from 2009 to early 2020, is officially over. On March 11, the Dow Jones closed more than 20% down from its most recent high, officially crossing the border into bear market territory. It was bound to happen eventually. But it is worth noting that the catalyst for this market correction, the ongoing COVID-19 pandemic, may continue to get worse before it gets better. Furthermore, the outbreak could have a long-lasting impact on the economy. 

With this backdrop in mind, it is understandable why some investors would choose to keep their hard-earned cash in their pockets and refrain from buying stocks. But others may see the recent market crash as an opportunity to buy quality stocks for a discount. If you fall into the second category, here are two pharma stocks I think are worth buying during these uncertain times.

Pharmacist in a pharmacy, leaning on a counter and smiling.

Image Source: Getty Images.

Gilead Sciences: Leading the hunt for a COVID-19 treatment

Gilead Sciences (NASDAQ:GILD) has been at the forefront of the development of a treatment for COVID-19. Officials at the World Health Organization (WHO) claimed that the company's antiviral drug, Remdesivir, was the most promising potential medicine for the rapidly spreading disease. On Feb. 26, Gilead Sciences announced that it would initiate two phase 3 clinical trials to study Remdesivir as a potential treatment for COVID-19. 

These clinical trials will take place primarily in China and other Asian countries, and the company will enroll a total of 1,000 patients, including 600 with moderate manifestations of the disease and 400 with severe manifestations. Patients will receive daily oral doses of remdesivir for five or 10 days.

Year to date, shares of Gilead are up by 12%, vastly outpacing the S&P 500 over the same period -- a performance the company owes to its attempt to develop a treatment for COVID-19.

GILD Chart

GILD data by YCharts

But even putting these efforts aside, Gilead Sciences is a stock worth buying. It is one of the world leaders in HIV treatment. During the fourth quarter, its Biktarvy was the top-prescribed HIV regimen in the U.S., and Biktarvy also ranks among the leaders in this category in Europe.

Furthermore, the company estimates that of the 1.1 million people in the U.S. who could benefit from taking some form of HIV PrEP medicine (pre-exposure prophylaxis, or daily medication taken by those at risk for HIV), only about 20% of them do so. Gilead's Descovy is one of the leading HIV prep medicines, and about 27% of HIV PrEP patients in the U.S. are on Descovy. The company expects that by the end of this year, that number will reach approximately 40% to 45%. According to CEO Daniel O'Day, the company's HIV business has been durable and sustainable, a trend O'Day expects to continue.

Beyond its HIV business, Gilead Sciences boasts other exciting prospects. Most notably, there is filgotinib, a potential treatment for rheumatoid arthritis (RA), which the company submitted to the U.S. Food and Drug Administration (FDA) last December. While the market for RA drugs is highly competitive, Gilead argues that filgotinib can make a dent because it addresses a need that is still widespread within the RA community that competing treatments have failed to address. As Johanna Mercier, the company's chief commercial officer, said during the company's fourth-quarter earnings call

Despite currently available treatment options, many patients are still living with symptoms of inadequately controlled RA around the world. In fact, only one out of five patients living with RA achieve complete remission at year one, which means four to five do not. Filgotinib has a compelling and differentiated clinical profile that we believe may uniquely address the significant unmet need for patients with RA.

The company expects to add other indications to filgotinib in due time, including psoriatic arthritis and Crohn's disease. Lastly, Gilead's revenue and earnings will probably not take a big hit as a result of the ongoing pandemic, since patients will keep taking their prescription medicines. For all those reasons, I think Gilead Sciences will be able to survive the current crisis -- and continue performing well long after it ends. 

Johnson & Johnson: A pharma giant to get you through tough times

Johnson & Johson (NYSE:JNJ) has also been at the front lines of the battle against COVID-19. The company, which is currently looking to develop a vaccine for the disease, recently announced plans to start clinical trials by September. However, Johnson & Johnson seems unlikely to win the race to develop a vaccine for COVID-19, as other companies are further along in their efforts. 

For instance, the National Institutes of Health recently started a phase 1 clinical trial involving a potential vaccine for COVID-19 developed by Moderna (NASDAQ:MRNA). The trial will involve 45 healthy adult volunteers. It will test the safety of the potential vaccine, its ability to provoke an immune response in the body, and the amount of the vaccine that causes expected side effects. Each volunteer in the trial will receive two doses of the vaccine.

But even if Johnson & Johnson does not make a fortune from its potential COVID-19 vaccine, I believe the company has what it takes to ride out the current crisis and come out more or less unscathed for two reasons. First, companies with strong financial positions tend to handle downturns and crises better than those with poor financial positions. In that spirit, let's compare some of Johnson & Johnson's key financial metrics for fiscal year 2019 with those of some of its competitors, namely AbbVie, Eli Lilly, and Merck

Company

Current Ratio

Debt-to-Assets Ratio

Free Cash Flow

Johnson & Johnson

1.3

17.6%

$19.9 billion

Merck 

1.2

33.1%

$9.9 billion

AbbVie

3.2

76.9%

$12.8 billion

Eli Lilly

1.2

40.7%

$3.5 billion

Source: Ycharts.

The current ratio is indicative of a company's ability to take care of its short-term debt; a current ratio of about 1 to 1.5 is generally considered good, while anything significantly higher or lower is usually a bad sign. The debt-to-assets ratio is a measure of a company's ability to handle its long-term debt, and lower is generally better, while the opposite tends to be true for free cash flow: Higher is typically better. 

Taking all three metrics into consideration, Johnson & Johnson seems to be in a better position than its peers mentioned here. And while there are many more financial ratios we could consider, Johnson & Johnson has a Standard & Poor's credit rating of AAA -- the highest rating possible -- which is also indicative of its financial strength. In short, even if the company's business is hit hard by the ongoing crisis, Johnson & Johnson has the financial fortitude to weather the storm. It's true that the company was facing more than 100,000 lawsuits related to product safety and marketing tactics as of October, but its balance sheet remains mighty.

Second, it seems unlikely that the pharma giant will be hit particularly hard anyway. Johnson & Johnson offers essential products -- drugs -- to many of its customers, and some of those drugs treat life-threatening conditions such as cancer. The company recently mentioned that it saw an increase in the demand for some of its products as a result of the COVID-19 pandemic, and overall, Johnson & Johnson does not expect the ongoing outbreak to disrupt its supply of medicines.

Given Johnson & Johnson's strong financial position and the fact that the company will likely be able to handle the economic effects of COVID-19 better than most, I believe now is a good time to buy its shares.