Although sometimes risky and volatile, the biotech industry is an excellent place to find stocks that can generate steady returns for years. That's because these companies tend to offer products that aren't optional for their consumers: lifesaving drugs.

Obviously, not all companies in this industry can deliver significant capital appreciation. But two that stand good chances right now are Bristol Myers Squibb (BMY 0.34%) and Novartis (NVS -1.64%). Neither stock has performed particularly well this year, but there's good reason to think that will change. 

1. Bristol Myers Squibb

Bristol Myers Squibb has a problem that even the most prominent drugmakers face every now and then. The company lost patent exclusivity for one of its top-selling products, Revlimid, last year.

To fix the issue, the biotech has turned to newer internally developed medicines and approvals. On the latter front, Bristol Myers just announced it would buyout oncology-focused Mirati Therapeutics for about $5 billion in cash. Mirati brings with it Krazati, an approved lung cancer medicine, as well as about a dozen pipeline programs. Bristol Myers expects to close the acquisition by the first half of 2024. 

As for the company's existing portfolio, it has earned several important brand-new approvals in the past four years. Although these newer products aren't enough to completely replace Revlimid, their sales have been growing rapidly. In the second quarter, Bristol Myers' revenue of $11.2 billion declined by 6% year over year. However, its new product portfolio reported sales of $862 million, a 79% year-over-year increase.

Many of these products should earn label expansions that will allow Bristol Myers to return to top-line growth, especially as some of its older products are still moving in the right direction. For instance, sales of cancer medicine Opdivo increased by 4% year over year to $2.1 billion. Yervoy, another cancer drug, registered sales growth of 11% year over year to $585 million.

The bottom line is that losing patent exclusivity for one of its most important products won't sink Bristol Myers. The company's deep pipeline and ability to partner with (or outright acquire) smaller drugmakers should allow it to turn things around eventually.

In the meantime, Bristol Myers' shares look attractive, trading at a forward price-to-earnings (P/E) ratio of just 7.6 -- compared to an average of 15.5 for the biotech industry. Lastly, Bristol Myers is a solid dividend stock, having raised its payouts by 39% in the past five years and offering a yield of 4.04%. Value and dividend investors can't go wrong with this one. 

2. Novartis 

Novartis has also been dealing with slow or inconsistent revenue growth, although it did just fine in the second quarter. The company's net sales of $13.6 billion improved by 7% compared to the year-ago period, a relatively solid performance for a pharmaceutical giant. Still, it hasn't always been like this for Novartis in recent years, and that's one reason it decided to spin off its generic drug unit, Sandoz.

The transaction was recently completed. It will allow Novartis to focus on its core novel pharmaceutical business, where it can develop products that, unlike generics, will benefit from patent protection and some pricing power. The company expects this recent move to accelerate growth, thanks to products like Entresto, which treats heart failure, multiple sclerosis therapy Kesimpta, breast cancer medicine Kisqali, and many others.

Novartis' pipeline is also deep and boasts well over 100 live programs. With that, Novartis' shareholders can expect a steady pace of new approvals or label expansions, one of the keys to long-term growth for drugmakers. Novartis also looks relatively reasonably valued. The company's forward P/E tops 14.8. Further, the company is also an excellent dividend payer. Novartis is on a streak of 26 straight years of dividend hikes.

The company's yield of 3.6% is competitive -- more than double the S&P 500's 1.6% payout. Novartis' ability to develop new medicines plus its long and solid track record of steady financial results and dividend growth make it an excellent stock to buy and hold for a long time.