Novartis AG (NVS-N)

If the economy slows down, you need a good pharma stock. Novartis was stuck in a rut until the current CEO started in 2018. He made a number of key acquisitions without paying and including smaller companies (they had overpaid in the past), focusing on their most lucrative divisions: drugs to treat cancer and immunology. he also fired a lot of executives, and hired some outsiders including a smart drug analyst from Wall Street. They sold Roche and pocketed the cash. Bought DTx Pharma, Chinnok Therapeutics, Calypso Biotech and other pharmas offering drug that boast positive trial results. Smart pick-ups, yet disciplined spending, like nixing a deal that cost too much. Their Q1 saw 10% net sales growth and 18% core operating income growth.

Will continue to own shares.
Likes prospects for the company.
Recent spinoff good for the business.
Attractive dividend.
Excellent company. 

$200 billion market cap. Fifty + drugs. None of them s over 6.5% of their revenue. They are spinning their ophthalmology business. Some positives there. He struggles to understand why the stock is down. Wouldn’t be his favorite European exposure but still well diversified solid business.

He likes it because of its exposure to Entresto, which cardiologists often call a wonder drug. The drug is relatively expensive ($9 per day) so the issue is getting insurance companies to pay for it. He thinks the runway for the drug is excellent and that it will become a blockbuster within a year or two. Pharma companies are under pressure because Trump is currently talking about reducing drug prices, but he (Grammer) is willing to wait on this stock.

It is a very big company with a pipeline of 13 drugs that are close to approves that could be blockbusters. They have drugs for heart failure that cardiologists are keen on. They have an eye care drug. They have a nice mixture of health care drugs. Pharma is unloved but that is an opportunity he can see. (Analysts’ target: $93.00).

This has 3 things going for it. It is an international stock being Swedish, and European stocks have been stronger than US stocks for the 1^st time in 10 years, and that should continue. Secondly, it is in healthcare which he likes. Thirdly, they’ve been doing a lot of research in immune boosting therapy, helping people fight cancer. This is going to be huge as we have so much further to go in fighting this scourge.

They are joint ventured with Merck. Their oncology business is growing. Their dividend is stable. They are big pharma and you won’t see as much growth out of it. He is in it for the dividend.

A value play that is run out of Switzerland with about a $200 billion market cap. There are 3 drivers to their business. There is the long-standing pharmaceuticals, they have the bio similar business, as well as Alcon for contact lenses. He likes the diversity. They have some key catalysts over the next couple of quarters. They are lacking in immuno ecology, cancer research, and there is speculation that they may sell one of their businesses in order to make an acquisition. Trading at 16X this year and down to just under 15X next year. Stable dividend. He likes this one very much.

The global pharma industry is under this cloud. The whole subsector is really struggling. They have come off their bottoms, but are working hard going sideways until we get more clarity on healthcare in the US.