Novartis AG (NYSE:NVS) has one of the biggest drug pipelines in the pharmaceutical industry, with dozens of new drugs filing for FDA approval over the next few years. The company has a strong presence in exclusive drug markets as well as generic markets. Sandoz, its primary generic division, hedges Novartis investors well against the impending patent cliffs which spook other big pharma investors. This makes Novartis a very well-rounded bet on the healthcare industry.
One of the pharmaceutical subdivisions that Novartis excels at is in oncology (which refers to the treatment of cancer). As of now, Novartis has marketing rights to eight major drugs in the world market, targeting multiple types of cancer. A chart summarizes Novartis' product line below.
|Name of Drug||Used In/With||Year of Inception||Patent Expiry|
|Afinitor||Renal Cell Carinoma (RCC), Subependymal Giant Cell Astrocytoma (SEGA)||2010||2016|
|Gleevec/ Glivec||Leukemia, Gastrointestinal Stromal Tumors (GIST), Demartofibrosarcoma Protuberans||2001||2015|
|Proleukin||Metastatic Melanoma, Metastatic Kidney Cancer||1992||N/A|
|Sandostatin LAR/SC||Acromegaly, Neuroendocrine tumors (NET)||1991||N/A|
|Zometa||Multiple Myeloma (in concert with chemotherapy)||2001||Last Friday|
As you can see, Novartis has enough drugs to support its growth until its pipeline begins to affect the revenue. Glivec is a blockbuster drug for blood plasma related cancers, and Novartis has the patent for the drug until 2015 (in addition, Tasigna should be its vastly superior successor, but not without competition). The focus of the rest of this article will be Novartis' newest oncology medication - Afinitor.
On Monday, September 5th, Afinitor got approval in the EU to treat a new type of cancer - advanced pancreatic neuroendocrine tumors. In clinical trials Afinitor reduced the chances of NET tumors progressing by as much as 65%, a great improvement in treating an extremely problematic type of cancer. The metabolic pathway targeted by Afinitor has never been approved before for NET tumors, so the signs are very encouraging.
This drug has also shown signs in the treatment of advanced breast cancer earlier this summer. While the drug had relatively little efficacy in many patients, it's speculated that Afinitor could increase the time breast cancer patients have before they need to begin chemotherapy. In addition, there are still unpublished results regarding the more aggressive HER2+ type of breast cancer.
Overall, Novartis AG is in a great position to treat the ever-increasing number of cancer patients out there. Afinitor has had great results in the European Union thus far, and may be able to treat more types of cancers due to its unique nature. If you were bullish on Novartis and its prospects prior to all this good news on Afinitor, this drug provides even more reason to buy shares of NVS. The shares have a reasonable P/E of 13.5 and a substantial 4.1% yield.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.