For investors, there are hardly any guarantees. But a few things are near certain in probability. For instance, as long as people live, it isn't a stretch to argue that they will need prescription drugs, medical devices, and medical care to treat chronic medical conditions.
And with the global population expected to grow by 2 billion individuals by 2050, the demand for prescription drugs practically has nowhere to go but up between now and then. In that vein, here are two quality pharmaceutical stocks that have a high likelihood of helping investors to build meaningful wealth over the next 10 years and beyond.
1. Bristol Myers Squibb
Bristol Myers Squibb's (BMY 0.30%) $146 billion market capitalization positions it as the ninth-largest pharmaceutical company in the world and the sixth-biggest in the U.S. With such a massive market cap, it shouldn't be surprising to learn that Bristol Myers' product portfolio is strong. Just how strong is it?
Bristol Myers has seven drugs in its portfolio that are poised to log at least $1 billion in sales in 2022. The company's top three drugs are the two cancer drugs known as Revlimid and Opdivo and an anti-coagulant co-owned with Pfizer (PFE 0.52%) named Eliquis. The $31 billion in revenue that this drug trifecta is poised to generate this year is unmatched. This is the very reason that analysts are projecting a whopping $46.1 billion in total revenue from Bristol Myers in 2022.
Such high revenue concentration in so few drugs may concern some investors. But few companies are arguably better prepared for patent expirations to key drugs than Bristol Myers. This is because the company has more than 50 compounds in its pipeline. Most importantly, Bristol Myers expects several of these compounds to become blockbusters several times over.
The anti-coagulant drug candidate called milvexian has annual peak sales potential of more than $5 billion. Bristol Myers' recently approved immunology drug called deucravacitinib (brand name Sotyktu) could put up more than $4 billion in annual peak sales for the company. And the rare heart disease drug mavacamten (brand name Camzyos) could produce over $4 billion in annual peak sales for the drugmaker. This is why analysts are anticipating 4.7% annual earnings growth over the next five years.
Bristol Myers' 3% dividend yield is nearly twice that of the S&P 500 index's 1.6% dividend yield. Given that the company's dividend payout ratio will likely come in just under 29% in 2022, this is a very safe dividend.
And income investors can scoop up shares of Bristol Myers at a lowly forward price-to-earnings (P/E) ratio of 9.6. This is significantly lower than the pharmaceutical industry's average multiple of 12.5.
With a $100 billion market cap, the French drugmaker Sanofi (SNY 0.56%) is the 11th-biggest pharmaceutical company in the world.
Unsurprisingly, Sanofi boasts a robust product portfolio, too. This includes five drugs -- led by the immunology drug Dupixent, co-owned with Regeneron -- that are on pace to be blockbusters (at least $1 billion in sales). And its polio and pertussis vaccine franchise is also on track to record over $2 billion in sales for 2022. Along with its consumer health division that includes products such as Act mouthwash, Aspercreme pain relief, and Gold Bond lotion, this is why analysts are forecasting $42.6 billion in revenue for the year.
Sanofi's future looks just as bright as its present. This is supported by the fact that the company had 87 projects in its pipeline as of July throughout a variety of therapy areas, such as immunology, oncology, and vaccines. That explains how analysts believe that Sanofi will deliver 12.3% annual earnings growth over the next five years.
Sanofi's 4.3% dividend yield is almost triple the S&P 500 index's yield. And with the forward dividend payout ratio projected to be 41.5%, the dividend is quite safe. Best of all, yield-oriented investors can pick up shares of the stock at a forward P/E ratio of just 9.7.