The 3 Worst-Performing Big Pharma Stocks of 2013

The Big Pharma Industry

• Stocks across the pharmaceutical space performed extraordinarily well in 2013.

• Bristol-Myers Squibb and AbbVie delivered incredible returns to shareholders, but others lagged far behind the S&P 500.

• What were the three worst-performing big pharma stocks of 2013?

#3 Sanofi

SNY Total Return Price data by YCharts

What Stalled Sanofi’s Progress?

• Revenue contracted toward the end of 2012 and for the first half of 2013. Sanofi also suffered particularly disappointing second quarter results due to generic competition. The company lowered its 2013 guidance and shares tumbled.

• However, sales picked up in Q3 and the worst of the patent cliff seems to be over. Sanofi has several promising drug candidates in its pipeline, and, despite the FDA rejection of multiple sclerosis drug Lemtrada, looks set to return to solid growth over the long-term

#2 Novo Nordisk

NVO Total Return Price data by YCharts

What Stalled Novo’s Progress?

• Diabetes specialist Novo Nordisk lagged far behind its peers last year.

• Shares tumbled after the FDA rejected its insulins Tresiba and Ryzodeg in February. Tresiba was meant to help Novo compete with Sanofi’s Lantus, the leader in the long-acting insulin market. The company must run more clinical trials before Tresiba and Ryzodeg can be re-considered for FDA approval.

What Stalled Novo’s Progress?

• Despite strong sales growth for its GLP-1 analog Victoza, shares tumbled in Q3 after the company missed sales and profit estimates.

• Novo will need to have strong sales growth for Victoza and its insulin products, as well as positive clinical results from its experimental drugs, to perform well this year.

#1 Eli Lilly

LLY Total Return Price data by YCharts

Why Eli Lilly Stumbled

• Eli Lilly shareholders had a bumpy ride in 2013.

• The company’s impressive line-up of blockbuster drugs is eroding as patents start to expire.

• Zyprexa lost market exclusivity in 2012 and had a negative impact on the company’s top-line last year.

• Cymbalta, Lilly’s best-selling drug, lost patent protection near the end of last year. Evista is also set to lose patent protection in March 2014

Why Eli Lilly Stumbled

• The company is slashing $1 billion from its R&D budget in an effort to soften the blow from these patent expirations.

• However, the key to getting investors excited about its long-term potential is to release stellar clinical trial data from late-stage candidates and get FDA approvals for drugs such as dulaglutide and ramucirumab.

Our Top Stock Pickfor 2014

Looking ahead …