2 Undervalued Healthcare Stocks Poised to Dominate the Next Decade

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Major pharmaceutical corporations, specifically Pfizer (PFE) and Novo Nordisk (NVO), have trailed the market in the past year, with Pfizer’s struggles extending over a longer period. Despite these companies facing difficulties, there are valid justifications for maintaining optimism about their future growth potential.

1. Pfizer could grow substantially within the oncology market, which currently holds the largest share of industry sales.
2. Novo Nordisk is expected to maintain a strong presence in diabetes care and the rapidly expanding weight management sector.
3. Both companies are likely to achieve impressive results during this period.

1. Pfizer

In simpler terms, Pfizer’s financial performance has been disappointing over the past few years, and things could get tougher as some of their crucial patents expire by the end of the decade. One such patent is for Eliquis, a popular anticoagulant drug. Yet, Pfizer has been proactive and has made preparations to handle this upcoming challenge.

I’ve had the opportunity to witness some noteworthy moves by the company recently. They’ve been actively engaging in acquisitions and licensing deals that have substantially enhanced their product pipeline, particularly in the area of oncology. To give you an example, they invested a staggering $43 billion to acquire Seagen – a relatively smaller player specializing in cancer treatments. This acquisition, given Seagen’s impressive portfolio for a company of its size, is expected to bring more crucial approvals in the field in the years ahead, with the larger company providing both the financial and strategic support.

Pfizer recently paid $1.25 billion initially to China-based biotech company 3SBio for the rights to SSGJ-707, a novel bispecific antibody in the rapidly growing oncology market. If successful, 3SBio stands to receive commercial and regulatory milestone payments totaling up to $4.8 billion (excluding royalties).

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These strategic steps are expected to benefit Pfizer significantly in the field of oncology, bolstering its presence there. By 2030, Pfizer aims to market eight blockbuster cancer drugs, an increase from the current five, while expanding its service to approximately double the current million patients. However, it’s important to note that Pfizer isn’t solely focused on cancer treatments. Its diverse pipeline also promises new product launches in other areas, helping the company rebound and continue its success trajectory.

In the near future, Pfizer’s underperforming shares in the market might experience a significant improvement, as its financial results are expected to recover due to its innovative initiatives. Given its current valuation, Pfizer’s stocks appear particularly appealing, with a forward price-to-earnings (P/E) ratio of 8.7, significantly lower than the healthcare sector average of 15.8. As a result, Pfizer’s shares could potentially yield impressive returns up until 2035.

2. Novo Nordisk

Eli Lilly appears to be dominating the weight management drug sector at present, surpassing Novo Nordisk who initially paved the way. Due to some clinical hurdles, Novo Nordisk has struggled in recent months. Yet, I believe there’s a strong possibility for the company to regain its footing and thrive in the coming decade. In my opinion, the market may not be fully recognizing its potential value.

The sales of the popular anti-obesity drug, Wegovy, are increasing significantly. Recently, Novo Nordisk applied for approval from the U.S. Food and Drug Administration for an oral version of semaglutide (the active ingredient in Wegovy). This development is advantageous for patients seeking a non-injectable alternative, as it serves as competition to Lilly’s upcoming oral GLP-1 medicine, orforglipron.

In another location, I’ve noticed that Novo Nordisk has initiated phase 3 trials for amycretin, a promising new contender in the field of weight loss. This innovative compound is being explored in not just one but two forms: oral and subcutaneous. Remarkably, both versions are currently undergoing late-stage clinical tests.

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Besides strengthening its existing pipeline, the company has also expanded it by entering into licensing agreements, such as one with United Biotechnology – a subsidiary of United Laboratories International Holdings based in China – regarding UBT251. This prospective anti-obesity drug functions like three gut hormones: GLP-1, GIP, and glucagon. The deal required Novo Nordisk to make an initial payment of $200 million and potentially up to $1.8 billion in additional payments upon achieving certain milestones.

Due to these advancements, Novo Nordisk is expected to maintain its leading position in weight management for the upcoming decade. Although other companies are growing competitive, none besides Eli Lilly have a product lineup or pipeline as extensive as Novo Nordisk’s. Moreover, the Denmark-based pharmaceutical giant will continue to reign supreme in the diabetes market, an area it has held dominance over for many years.

Novo Nordisk consistently earns revenue and profits that tend to increase more rapidly than those of other companies of similar size. However, its forward P/E ratio stands at 16.7, which is slightly higher than the industry average. In my opinion, this undervalues a company that achieves better-than-average performance, boasts a robust pipeline in a rapidly expanding sector, and counts two of the top 20 best-selling drugs – Wegovy and Ozempic – among its offerings.

For investors willing to stay the course, Novo Nordisk’s future still looks incredibly bright.

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2025-07-21 16:33