It is difficult to know accurately what the world will look like 10 years from now, but some predictions seem relatively safe. Here are just two examples. First, in a decade, equity markets will be up from their current levels.
Second, the need for lifesaving medicines won't have subsided 10 years from today. If these predictions hold, which seems very likely, it might be worth it for investors to add shares of top drugmakers to their portfolios. Let's consider two excellent candidates: Novo Nordisk (NVO 0.88%) and Incyte (INCY -0.94%).
1. Novo Nordisk
Denmark-based Novo Nordisk delivered a strong performance last year. The company's net sales for 2021 came in at 140.8 billion Danish Kroner ($20.9 billion), 11% higher than the previous fiscal year. Among the drugmaker's top-performing products, its diabetes lineup continues to do well. Novo Nordisk has been one of the leaders in diabetes care for decades.
As of November 2021, it held a 30.1% share of the diabetes care market worldwide, which was higher than the 29.3% slice it had as of November 2020. Some of Novo Nordisk's top-selling medicines include glucagon-like peptide 1 (GLP-1) products Rybelsus and Ozempic. GLP-1 treatments help type 2 diabetes patients produce the optimal amount of insulin.
In 2021, sales of Rybelsus jumped 158% year over year (YOY) to 4.8 billion Danish Kroner ($716.7 million). Sales of Ozempic came in at 33.7 billion Danish Kroner ($5 billion), 59% higher than the previous fiscal year.
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Meanwhile, Novo Nordisk's obesity medicines Wegovy and Saxenda also performed well with their combined sales increasing by 50% YOY to 8.4 billion Danish Kroner ($1.2 billion). Wegovy was first approved in the U.S. last year and earned marketing authorization in the European Union in January. Expect this medicine to continue growing its sales for many years to come. Novo Nordisk's entire lineup looks promising.
The company's net profit for 2021 increased by 13% YOY to 47.8 billion Danish Kroner ($7.1 billion). Given the increase in the percentage of the population with diabetes, the company's products will become even more in demand. In the meantime, it is developing other medicines to remain a leader in this market. The company boasts nearly a dozen pipeline programs in diabetes and obesity, with four of them in phase 3 studies.
One of those four is Icodec, a potential once-weekly insulin product for patients with type 2 diabetes. Overall, Novo Nordisk's prospects look bright, given its solid revenue and pipeline, as well as its leadership in the diabetes care market. The company is also an excellent stock to consider for income-seeking investors. For all those reasons, this healthcare stock is an excellent one to buy and hold for the next 10 years.
2. Incyte
Over the past few years, investors have been worried about Incyte's heavy reliance on its crown jewel, Jakafi, which treats a couple of bone-marrow diseases called myelofibrosis and polycythemia vera. In 2021, the company's product sales from Jakafi came in at $2.13 billion, 10% higher than the year-ago period. Incyte also collects royalty revenue from this medicine from Novartis, which markets it outside the U.S. as Jakavi.
In 2021, Incyte collected about $338 million in royalty revenue from Jakavi, 22% higher than fiscal year 2020. Incyte's total revenue from this one product came in at about $2.5 billion and accounted for nearly 83% of Incyte's almost $3 billion top line for the year, which grew by 12% compared to 2020.
That's not a trivial amount, but thankfully, Incyte has been looking to rely less on Jakafi. Last year, the company earned approval for Opzelura -- the topical formulation of Jakafi -- in treating atopic dermatitis. And in 2020, Incyte earned approval for two cancer medicines: Pemazyre and Monjuvi.
In addition, the company boasts two dozen clinical programs in development. Incyte's newer products should be able to grow their sales in the coming year before Jakafi loses patent exclusivity in 2027, and sales of the therapy start dropping.
Opzelura could hit its predicted annual peak sales of $1.5 billion (or roughly half of the company's total revenue for 2021) before then, in addition to newer approvals that should further diversify Incyte's revenue base. Thanks to these developments, Incyte looks to be in a strong position to perform well in the coming decade.
