Alexion Pharmaceuticals (NASDAQ:ALXN) develops therapies solely for rare diseases, so you probably haven't heard of most of the conditions that it makes drugs for. However, for investors, it's worth paying attention to because of how effective it is at penetrating its target markets. For example, within 18 months of obtaining FDA approval for its paroxysmal nocturnal hemoglobinuria treatment, Ultomiris, Alexion had enrolled 70% of the eligible U.S. patient population with the disease.

That's not the only thing for investors to appreciate about Alexion, however. Given its extensive drug-candidate pipeline, stable revenue growth, positive outlook, and some new investor-friendly policies, it's probably worth adding to your portfolio.

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Alexion projects steady growth and broad pipeline progress

First and foremost, Alexion is healthy and profitable, with less debt on its books than it has cash. So it won't have its growth choked by indebtedness anytime soon, and can use its levered free cash flow -- $1.69 billion over the past 12 months -- to strengthen its financial position, invest in new projects, or acquire smaller competitors.

At present, management expects revenues to grow at a compound annual rate of around 10% through 2025. Given that its quarterly year-over-year revenue growth has been 20.1%, this expectation seems reasonable, at least in the short term. Investors should take note that from the start of 2017 to now, the company's compound annual growth rate topped 16%, so management's projection is actually for slower growth. Still, projected revenues increasing by 10% per year isn't anything to sneeze at, and if this projection proves accurate, the stock price will probably rise.

In pursuit of its revenue goals, Alexion hopes to commercialize a handful of its therapy candidates currently in the final phase of clinical trials while continuing to expand its earnings from its drugs on the market. Aside from the 17 projects that the company has in late-stage clinical development across seven rare disease areas, it also plans to initiate clinical trials for at least five new programs for rare diseases. While it's true that it has an impressive number of phase 3 studies underway, it's important to note the caveat that it only has a handful of drugs, most of which it is testing against multiple illnesses.

For instance, the company hopes its research will support a label expansion for Ultomiris as a treatment for people with myasthenia gravis, but it's also in clinical trials for neuromyelitis optica spectrum disorder, an entirely different pathology. Alexion's drug Soliris has a similarly large and heterogeneous scope of potential patient populations. And being able to sell the same drug for different diseases would be an extremely favorable outcome.

Investor-friendly policies are icing on the cake

Alexion plans to spend at least $3 billion on share buybacks over the next few years. In its second-quarter earnings report, management stated that its new capital allocation strategy includes a target of returning at least a third of its average annual free cash flow to shareholders over the next three years. This should excite potential investors because it shows that management isn't afraid to set concrete goals for rewarding shareholders. On the other hand, if Alexion fails to meet these goals, you can bet that shareholders will be unhappy, so any unexpected contraction in the company's cash flow could have a serious impact on its share price, though this situation is unlikely.

In sum, there's a lot to like about Alexion. While its stock price probably won't grow as rapidly as a smaller company's might, the fact that its pipeline is packed with treatments in late-stage clinical trials is the central reason why I expect the next few years will be good for its shareholders. Compared to other pharma companies of the same size, I expect Alexion to grow more rapidly and to be a better investment, so I think it's worth buying.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.