As investing legends like Warren Buffett probably know better than anyone, there's something satisfying about buying shares of a company you intend to hold for the rest of your career as an investor. By making a commitment to remaining patient for the long haul as the money trickles in, you're also demonstrating to yourself that you're serious about using the savvy investing strategies that it takes to improve your financial life in a durable fashion.
Psychology aside, there are a handful of appealing opportunities for long-term investment in the big pharma space right now. Let's take a peek at a pair of everlasting big pharma stocks that are ripe for buying and holding in your portfolio forever.
NASDAQ: VRTX
Key Data Points
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals' (VRTX +1.04%) core strategy is to develop medicines to treat or cure rare diseases with known causes, and it has a history of success, which is why it's worth an investment for the long term.
It has seven approved medicines, six of which treat cystic fibrosis (CF), a rare hereditary disorder of the lungs, and one that treats both sickle cell disease (SCD) and beta thalassemia, a pair of rare illnesses affecting the blood. Moving those products is how it grew its trailing-12-month net income by 63% over the last five years, reaching more than $3.6 billion in the process. But the clever thing is that it didn't need to actually go through the trouble of doing research and development (R&D) work from a fresh slate for each of its drugs.
Instead, Vertex recognized that while its early medicines for CF were unique in their ability to address the disease's root causes, it could offer even more value to patients by doing follow-on development to test combinations of its drugs. That saves it money because it doesn't necessarily need to screen vast numbers of molecules to find leads for further exploration; it can repackage the solutions that it knows work for patients, and do a few tweaks to reflect lessons learned. And per the programs in its pipeline, there's no sign of it stopping the process.
In other words, it's the master of its target market, and it will continue to be, as no other players are even attempting to compete with it because doing so would mean fighting a deeply entrenched incumbent.
The company is also diversifying its offerings into new areas, recently partnering with CRISPR Therapeutics to commercialize Casgevy, the pair's jointly developed near-curative treatment for SCD and beta thalassemia.
Branching out into new markets while cementing its hold on its older ones effectively means that Vertex's deep expertise in CF is yielding the financial resources it needs to take somewhat riskier bets on growth opportunities. And that's why Vertex is worth buying today and holding forever, because eventually more of those risky bets will pay off.
NYSE: NVO
Key Data Points
2. Novo Nordisk
Novo Nordisk (NVO +0.57%) makes its money by selling cardiometabolic drugs for some of the largest markets in the biopharmaceutical industry.
If you've seen those advertisements for Ozempic, its injection for type 2 diabetes, or Wegovy, which is the same medicine but indicated for treating obesity, you're familiar with Novo's leading products at the moment. Per Mordor Intelligence, the market for Ozempic and its sibling medicines could become as large as $33 billion by 2029.
But this company's position in the market is more than just a flash in the pan derived from hot sales of a couple of popular drugs, as its trailing-12-month net income of more than $12.1 billion indicates after growth of 111.6% over the last five years. Consider that the company's traditional fare before the rise of Ozempic was insulin in various formats, and other drugs intended to help people with other metabolic, hormonal, or blood clotting issues. In that context, its pipeline today is simply a continuation of its previously successful strategy.
Novo is intent on retaining and expanding its penetration of the obesity and diabetes markets, and it's also targeting other major markets like chronic kidney disease, Alzheimer's disease, and a couple of others. Much like Vertex, the business aims to squeeze as much mileage out of its winning cardiometabolic medicines as possible, but it chooses to do so by testing them for additional indications rather than by bundling them as combination drugs, at least for now.
In the long run, Novo's ongoing home run with Ozempic should be more than enough to fund quite a bit of further development. Even if it whiffs on some of its attempts, it won't exactly matter much for at least the next few years as it can't even yet produce enough Ozempic to meet global demand.
Once that problem is solved -- and it could take a while -- the company might need to start planning for how to budget for what comes next. And if its past investments are any clue, management will ensure that the future direction of the company will be lucrative for shareholders yet again.
