Pharmaceutical Stocks Get Sales Boost from Clinical Report

Newly released clinical data shows that cancer drugs are working - supporting Morningstar equity analysts' $33 billion immuno-oncology sales projection by 2022

Damien Conover, CFA 15 May, 2015 | 9:44AM
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Leading up to the American Society of Clinical Oncology meeting from May 29 to June 2, strong clinical data was previewed, supporting our $33 billion immuno-oncology sales projection by 2022, versus consensus expectations of $20 billion. We believe the data sets up a major new class of drugs that can treat several types of cancer.

Further, the data reinforces our wide economic moats for Bristol-Myers (BMY), Roche (RO), Merck (MRK), and AstraZeneca (AZN), as it not only looks strong enough for approval of each of these companies' leading IO drugs, but also should support strong pricing power and rapid market uptake. In a drug environment with increasingly restrictive prices, cancer drugs have maintained pricing power, which should continue with IO drugs because of the lack of treatment options in lethal settings.

We continue to view Merck as the most undervalued in the leading IO group, but Roche and Bristol also look undervalued partially based on our bullish projections for the IO drug class. While Merck largely presented its data at the recent American Association for Cancer Research meeting, Roche and Bristol previewed strong data for ASCO with the POPLAR and CheckMate 017 studies.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
AstraZeneca PLC8,845.00 GBX2.04Rating
Merck & Co Inc73.61 USD0.77Rating
Roche Holding AG383.00 CHF-1.03

About Author

Damien Conover, CFA  is an equity analyst and associate director at Morningstar.

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