Markets

2 Stock Markets You Can Buy in 2023 and Hold Forever

Companies that managed to beat the market and stay in the green during this challenging year are rare, but they do exist. But investors should not rush to buy shares of such companies for that reason alone. Outperformance during a bear market is great. What is more important is that it delivers market returns in the long run. And luckily, some of these recent outperformers seem capable of doing just that. Let’s consider two examples: Novo Nordisk (NGO 0.28%) and Amgen (AMGN -0.51%).

1. Novo Nordisk

Novo Nordisk is a pharmaceutical giant based in Denmark and specializing in diabetes care. It has been a leader in this field for several decades, partially explaining its performance so far. Diabetes patients will not stop taking the medications they need to keep this chronic disease under control, nor will doctors stop prescribing those therapies.

Novo Nordisk had a 31.6% share of the diabetes care market in August, up 1.7% from the previous year. Novo Nordisk should carry its momentum into next year. Some of its products continue to work well, notably the diabetes drugs Ribelsus and Ozempic. In the first nine months of this year, Ribelsus sales rose 140% year-over-year to 7.2 billion Danish kroner (about $1 billion).

Ozempic’s revenue jumped 86% year-on-year to DKK 42.8 billion (about USD 6.1 billion). Novo Nordisk’s total sales in the period were DKK 128.9 billion ($18.4 billion), up 26% from the prior-year quarter. The company is also considering critical regulatory developments that could shake its share price next year. Novo Nordisk is working on ikodec, a new insulin product that could greatly simplify the lives of diabetes patients as a once-a-week option.

Icodec has already produced solid results in various late-stage clinical trials. Novo Nordisk plans to file regulatory filings for it in the first half of next year. This once again underlines Novo Nordisk’s ability to innovate in its core therapeutic area. And that will serve him well in the coming years. The prevalence of chronic diseases, including diabetes, is increasing as the world’s population ages.

These two factors will only increase the need for even more advanced diabetes treatments. Few have been able to keep up with Novo Nordisk in this area. The company is also developing therapies in other areas, including various rare diseases, Alzheimer’s disease and more. Having crushed the market for years, Novo Nordisk won’t stop now because its ability to develop new therapies – a key factor behind its success – is alive and well.

2. Amgen

Although Amgen has outperformed the stock market this year, the company’s financial results have not been as impressive. In the third quarter, the drugmaker’s revenue fell about 1% from a year earlier to $6.7 billion. Some of the company’s older products are experiencing declining sales due to competition. That includes rheumatoid arthritis drug Enbrel, whose third-quarter revenue fell 14% from a year earlier to $1.1 billion.

Despite these obstacles, focusing on the long game is essential. Amgen has received important approvals over the past few years and is well positioned to continue to do so. Some of its most important new drugs include the cancer drug Lumacras, which first received the green light in the US in May 2021.

Tezspire, an asthma drug, was first approved in the country in December 2021. In addition to its already rich pipeline, Amgen recently announced some acquisitions to help it continue its operations. In October, the biotech bought ChemoCentric, a drugmaker focused on autoimmune diseases, for $3.7 billion in cash.

A key asset of this transaction is Tavneos, which was first approved in October 2021 in the US for the treatment of vasculitis, a rare autoimmune disorder. Some analysts see Tavneos’ annual potential at around $2 billion by 2030. Recently, Amgen announced that it would acquire Horizon Therapeuticsbiotech focused on rare diseases, for $27.8 billion in cash.

The transaction is expected to close by the first half of 2023 and will help Amgen expand its line and pipeline. Another of Amgen’s business units looks promising, namely its biosimilar segment. According to a study by the Kaiser Family Foundation, in the US, 83% of adults say the cost of prescription drugs is unreasonable. Biosimilars often offer cheaper options for breakthrough but expensive drugs and, as such, have helped save patients and the US health care system billions over the years.

Amgen is currently working on several biosimilars, including one for the cancer drug Stelara, which it sells Johnson & Johnsonanother for the treatment of eye diseases Eilea, commercialized by Regeneronand the other for Soliris, which is owned by a subsidiary AstraZeneca and treats a rare blood-related disease called paroxysmal nocturnal hemoglobinuria.

Whether developing entirely new drugs or biosimilars, Amgen has many candidates to replace its older products and accelerate revenue growth. This will allow the pharmaceutical company to remain successful for some time.

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