Many investing trends and fads come and go, but the need for innovative medicines isn't one of them. Drugs, especially those that treat potentially life-threatening conditions, are always in demand. That's why companies that develop and market medicines can remain relevant and perform well for a long time, provided they continue innovating and discovering newer and better therapies.
Let's look at two biotech stocks that can do exactly that through the next decade while delivering solid returns to their shareholders: Sanofi (SNY 0.68%) and Gilead Sciences (GILD 2.18%).
NASDAQ: SNY
Key Data Points
1. Sanofi
The year was going relatively smoothly for Sanofi until it reported its third-quarter results during which it announced some important business moves. First, the French pharmaceutical giant will separate its consumer health business into a stand-alone, publicly traded corporation also headquartered in France. Second, Sanofi abandoned its 2025 operating margin goal of 32% due to increased investment in its pipeline.
This news is what caused the sell-off, but it seems a little overdone. Sanofi is committed to investing in its future while shedding a low-growth part of its business. While that will negatively affect its operations in the short run, the company should more than recover over the next decade, especially when considering its existing lineup. The company's portfolio features products like Dupixent, its most significant growth driver.
The eczema treatment saw its sales soar by 32.8% year over year to 2.8 billion euros ($3.07 billion) in Q3. While Sanofi's total sales declined by 4.1% year over year to almost 12 billion euros ($13.2 billion), the company launched several new products this year that will contribute meaningfully to the top line. For instance, there is the company's respiratory syncytial virus (RSV) vaccine Beyfortus and hemophilia treatment Altuviiio.
Both earned the green light this year; in the case of the former, it is one of the very first RSV vaccines approved globally. This market should grow rapidly through the end of the decade, and as one of the first biotechs to compete in it, Sanofi could be one of the major winners. The drugmaker boasts several other key products, including Tzield, the first treatment approved in the U.S. to prevent the onset of type 1 diabetes (T1D).
Sanofi will seek label expansions for its existing products: Tzield in treating newly diagnosed T1D patients, Dupixent in targeting chronic obstructive pulmonary disease (COPD), and many more. The company will also launch new medicines on the market; with a pipeline of nearly 80 ongoing clinical trials, that shouldn't be a problem. So, despite Sanofi's recent major sell-off, investors can still bet on the stock to provide solid returns through 2033.
NASDAQ: GILD
Key Data Points
2. Gilead Sciences
Gilead Sciences also hasn't performed well this year, partly due to its fluctuating sales. The company's antiviral Veklury is perhaps the oldest COVID-19 therapy still in use in the U.S., but its revenue hasn't been consistent for obvious reasons. Coronavirus cases have been up and down. However, besides this aspect, Gilead Sciences' business is doing well.
In Q3, the company's revenue of $7.1 billion remained flat compared to the year-ago period. But without Veklury, its top line increased by a decent 5% year over year. The drugmaker's HIV portfolio continues to be its most important unit. Sales of Biktarvy, the top-prescribed HIV regimen in the U.S., increased by 12% year over year to $3.1 billion.
Gilead Sciences has been a leader, perhaps the leader, in the HIV market for a while. The company's Sunlenca, a long-acting HIV therapy that earned approval in the U.S. in December, should contribute to its top line eventually, while the company will surely develop newer medicines. Gilead Sciences is also looking to make significant strides in oncology. Overall, the drugmaker is running more than 60 clinical trials.
Further, Gilead is a solid dividend stock. The company's yield of 4.02% easily beats the S&P 500's average of 1.62%, while it has raised its payouts by almost 32% in the past five years. Gilead Sciences' cash-payout ratio of about 48% also leaves room for more increases without threatening the company's cash balance. A steady underlying business and strong dividend profile make this a top stock for the next decade, especially for investors in the market for reliable blue-chip dividend stocks.
