The Note Moving Pharma Giants Today

Large-cap pharmaceutical companies will see revenue growth hit a peak during 2016 and 2017, followed by a wave of patent expirations in the closing three years of the current decade, an analyst said Monday.

Revenue growth will resume in the early 2020s, driven by four new drug classes, each of which may generate $15 billion in annual revenue 10 years from now, according to Purkiss.

Caution! Overweight

• Pfizer Inc. PFE
• Eli Lilly and Co LLY
AbbVie Inc ABBV

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The analyst maintained Overweight ratings on all three, with Pfizer having "the largest upside" to its $45 target, Purkiss said. Lilly gets a $97 target and AbbVie $77 from Purkiss.

Other Pharma Ratings

Purkiss rates Merck & Co., Inc. MRK at Neutral with a $65 target and Bristol-Myers Squibb Co BMY at Underweight with a $60 target.

Recovery

An increase in regulatory approvals for new drugs in the last few years "is beginning to stimulate a wider recovery" in revenue growth for pharmaceutical companies, according to Purkiss.

Although a so-called patent cliff looms later in the decade, Purkiss said four new drug classes will reignite growth in the 2020s.

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New Classes On The Horizon

Promising new classes include a group of heart disease drugs called CSK9 inhibitors, which may benefit:

• Amgen, Inc. AMGN
• Regeneron Pharmaceuticals Inc REGN
• Pfizer

Disease-modifying Alzheimer's therapies may stimulate the long-term outlook for the following:

• Lilly
• Biogen Inc BIIB
• AstraZeneca plc (ADR) AZN
Cancer and autoimmune disease drugs called PD-1/L1 inhibitors may help:
• Pfizer
• AstraZeneca
• Merck
• Roche Holding Ltd. (ADR) RHHBY

Purkiss also stated that in the upcoming decade, cancer drugs classed as CDK inhibitors might boost revenue for:

• Pfizer
• Lilly
• Novartis AG (ADR) NVS
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