Top 10 Pharma Investments

can we do a deep dive on the big pharma ? can you check the top 10 ones and check what the have in the pipeline check the betting markets and see if they are overprised or not and if we should have an investment in them My conclusion Yes—there are some attractive investments here, but I would be selective. On a five-year horizon, my strongest candidates are AstraZeneca and Roche, followed by AbbVie and Gilead. Lilly deserves consideration for growth despite its higher valuation. Novo Nordisk is a potentially interesting turnaround, with substantially greater uncertainty. The betting markets do not currently provide a convincing investment edge. Several contracts measure approval before a particular deadline, and some have questionable liquidity. They are useful supporting evidence, but insufficient to establish whether a pharmaceutical company is undervalued. This assessment uses information available on 2 October 2026, with share prices from 1 October. I interpreted “top 10” as the largest listed pharmaceutical companies by market capitalisation. That includes J&J’s medical devices and Roche’s diagnostics businesses; Pfizer sits just outside this particular selection. Ranking source 1. The ten companies: valuation snapshot Prices below are US-listed shares or depositary receipts, in dollars. Forward P/E means price divided by estimated future annual earnings. Company Share price Forward P/E My assessment at this price Eli Lilly $1,149.85 27.6× Premium valuation, supported by exceptional growth Johnson & Johnson $258.66 23.1× Looks expensive relative to current growth AbbVie $259.93 17.2× Reasonable; replacement growth is already visible Merck $143.81 16.8× Insufficient discount for the Keytruda challenge Roche $52.35 16.6× Attractive balance of existing earnings and pipeline Novartis $141.05 15.3× Reasonable, but recent pipeline failures matter AstraZeneca $157.70 14.7× Strongest apparent value/growth combination Amgen $407.27 17.3× Fair to full; substantial expectations and debt Gilead $147.50 16.2× Reasonable, supported by HIV earnings Novo Nordisk $37.40 11.8× Cheap-looking turnaround, with real earnings risk A qualification: these are the data provider’s forward multiples, not a consistently reconciled set of 2026 company-guided earnings. Acquisition charges and different earnings adjustments complicate comparisons. For example, Lilly trades at approximately 32× the midpoint of its own 2026 adjusted EPS guidance, versus the vendor’s 27.6× forward estimate. I use these multiples as a screening tool, not a precise measure of intrinsic value. Lilly guidance 2. What matters in each pipeline I have focused on programmes capable of materially affecting earnings. Counting every early-stage project would obscure the investment question. AstraZeneca — my strongest initial candidate The business: first-half revenue increased 6% and core earnings per share increased 11%, at constant exchange rates. That is a useful starting point for a company trading around 15× forward earnings. H1 results Pipeline and launches: - Tozorakimab, COPD: positive Phase III results and priority FDA review offer a potentially meaningful new respiratory franchise. Trial update - Baxdrostat, hypertension: already approved; commercial adoption is now the relevant uncertainty. Approval - Camizestrant, breast cancer: received accelerated US approval for a specific treatment-switching setting. However, the separate SERENA-4 trial failed, limiting the evidence for broader use. Approval, SERENA-4 outcome Investment judgment: the combination of existing growth, several commercial opportunities and a modest multiple looks attractive. My main concern is execution: successful trials must translate into profitable sales, and the camizestrant setback demonstrates why every proposed indication cannot be valued as a success. Verdict: candidate for an initial position. Roche — attractive, with meaningful upcoming decisions The business: first-half core EPS rose 9% at constant exchange rates but fell 2% in Swiss francs. Currency therefore materially affects the reported picture. H1 results Pipeline: - Giredestrant, breast cancer: FDA decisions are scheduled for 30 November and 18 December 2026, covering different disease settings. October update - Fenebrutinib, multiple sclerosis: accepted for priority FDA review on 30 September. Its relapsing-MS trials were positive; in primary progressive MS, it established non-inferiority to Ocrevus, rather than statistically proven superiority. Regulatory and clinical update - The obesity programmes provide additional potential, but I would assign them a substantial development discount. Investment judgment: around 16.6× forward earnings looks reasonable for an established business with several potentially important launches. Risks include competition, safety and some replacement of Roche’s own existing sales. Verdict: candidate for an initial position; the case should remain viable without assuming every pipeline programme succeeds. AbbVie — credible growth after Humira The business: Q2 revenue increased 10.2% and adjusted EPS 22.9%. Skyrizi and Rinvoq each grew roughly 24%, while Humira continued declining. The replacement of lost Humira earnings is already visible in the accounts. Q2 results Pipeline and launches: - Tavapadon, Parkinson’s disease: approved as JUVMO on 28 September, with launch planned for October. Approval - Zumilokibart/APG777, atopic dermatitis: positive Phase II results support further development, but significant clinical risk remains. September results Investment judgment: the valuation is reasonable given demonstrated growth. The main vulnerability is increasing dependence on Skyrizi and Rinvoq. Acquiring new programmes also has an economic cost, even when accounting presentations remove some associated charges. Verdict: a reasonable investment candidate, although not obviously deeply undervalued. Gilead — strong HIV economics, with oncology upside The business: Q2 revenue rose 10%; HIV revenue rose 12%. Acquisition-related charges made reported and adjusted headline earnings unusually difficult to interpret. Q2 results Pipeline and launches: - Lenacapavir/Yeztugo: already approved for HIV prevention; uptake and further long-acting combinations matter more than initial approval. - Anito-cel, multiple myeloma: under FDA review, with a 23 December 2026 target decision date. Gilead’s acquisition of Arcellx increases its economic exposure to the programme. Acquisition and regulatory details - Oncology remains uneven: Trodelvy sales grew, but the EVOKE-03 lung-cancer study was discontinued. Q2 update Investment judgment: approximately 16× forward earnings is defensible. I would base the investment on the HIV franchise, with oncology contributing additional potential. Large acquisitions need to earn an adequate return. Verdict: reasonable for a position combining established earnings with selected growth opportunities. Lilly — expensive, but not automatically overpriced The business: Q2 revenue increased 48%. That growth distinguishes Lilly from slower-growing companies with superficially similar “premium” valuations. Pipeline and launches: - Retatrutide: positive Phase III results; Lilly plans its US filing in Q1 2027. - Orforglipron/Foundayo: already approved for obesity, with a diabetes application submitted. - Further obesity and metabolic programmes could extend the franchise, but should not all receive full commercial value today. Financial and pipeline update Investment judgment: the question is how long rapid profit growth can continue as prices, reimbursement and competitors evolve. Strong volume growth can coexist with declining realised prices. At roughly 28× forward earnings, Lilly could deliver attractive returns if sustained earnings growth remains strong. A material slowdown would expose investors to both lower forecasts and a lower valuation multiple. Verdict: a credible growth investment, with more demanding expectations than my preferred value candidates. Novartis — reasonable valuation, but reassess the pipeline The business: Kisqali, Kesimpta, Scemblix and Pluvicto continued growing strongly, although Q2 core EPS was flat in dollars. Q2 results Pipeline: - Remibrutinib, multiple sclerosis: positive Phase III results support a potentially important additional use. September results - Pelacarsen: the cardiovascular outcomes trial missed its primary endpoint. Trial outcome - Del-desiran: the Phase III HARBOR study also missed its primary endpoint. Trial outcome Investment judgment: approximately 15× earnings is reasonable, but any valuation still assuming major success from those failed trials needs revision. The strongest case rests on the growing approved medicines. Verdict: a credible alternative to the main shortlist, with reduced confidence in pipeline upside. Novo Nordisk — potentially valuable, but a genuine turnaround The business: updated 2026 guidance still envisages adjusted sales and operating-profit growth between 0% and −6% at constant exchange rates. A low multiple is understandable when earnings are under pressure. Q2 update Pipeline: - CagriSema: submitted for US obesity approval; a decision was anticipated in late 2026. - Its higher-dose head-to-head study failed to establish non-inferiority against tirzepatide. REDEFINE-4 results - A later lower-dose comparison produced positive results, but does not overturn that higher-dose outcome. REIMAGINE-5 results - Zenagamtide: Phase III development offers another potentially important metabolic programme. Q2 pipeline presentation Investment judgment: at around 12× forward earnings, a successful stabilisation could produce substantial upside. Continued pricing pressure and market-share losses could instead keep earnings falling. Verdict: suitable only as a smaller, speculative turnaround position until commercial stabilisation becomes clearer. Merck — the patent cliff dominates The business: Keytruda and Keytruda Qlex contributed about half of Q2 revenue. Merck expects US biosimilar competition could begin in December 2028, making replacement growth crucial. Q2 update, 2025 annual report Pipeline and launches: - Enlicitide/Lipfendra: approved oral cholesterol treatment. - Sacituzumab tirumotecan: positive Phase III oncology data. - Intismeran autogene/V940, with Moderna: positive Phase III melanoma results. Trial announcement - Ifinatamab deruxtecan: its approval application was withdrawn in September; further Phase III development continues. Withdrawal Investment judgment: promising assets exist, but they must replace an enormous earnings stream. At nearly 17× forward earnings, I do not see an especially generous discount for that uncertainty. Verdict: wait for either a lower valuation or stronger evidence of replacement earnings. Amgen — useful pipeline, constrained by debt and erosion The business: Q2 revenue rose 10%, but adjusted EPS increased 4%. Prolia sales fell 32% amid biosimilar competition. Debt of $57.3 billion versus $14 billion cash gives approximately $43 billion net debt. Q2 results Pipeline: - MariTide: Phase III obesity development, with potential dosing convenience. - Olpasiran: Phase III cardiovascular outcomes programme. Lowering a biomarker is insufficient; clinical benefit must be demonstrated. - Dazodalibep: positive Phase III Sjögren’s disease results announced in September. Trial results Investment judgment: the pipeline is interesting, but around 17× forward earnings already assumes considerable resilience. MariTide needs competitive efficacy, tolerability and commercial economics. Verdict: watchlist; I prefer other companies at current relative valuations. Johnson & Johnson — good business, demanding price The business: Q2 sales increased 6.6% and adjusted EPS 4.7%. The diversified business provides some resilience, but approximately 23× forward earnings is a substantial valuation. Q2 results Pipeline and launches: - Icotrokinra/ICOTYDE: approved psoriasis treatment, with further development opportunities. - Milvexian: Phase III anticoagulation programme. - TAR-210: investigational bladder-cancer treatment, alongside expansion opportunities for the approved oncology portfolio. Company pipeline Investment judgment: quality alone does not justify any price. Current earnings growth provides less support for its multiple than Lilly’s growth provides for Lilly’s premium. Verdict: the clearest “too expensive for me at this price” in this group. 3. What the betting markets actually say These are displayed webpage snapshots retrieved on 2 October, not verified executable prices. I could not establish reliable order-book depth or a comparable, liquid market for every company. Contract Displayed odds How I would interpret it Retatrutide approved by end-2026 3% Mainly a timing question: Lilly plans to file in Q1 2027. It does not imply a 3% eventual approval probability. Skin-cancer vaccine approved by end-2027 67% A broad contract; it cannot automatically be assigned to Merck/Moderna’s particular programme. Anito-cel FDA decision in 2026 Headline 93% The page also displayed $0 volume and inconsistent headline/quote figures. I would exclude this from quantitative valuation. Ifinatamab deruxtecan in 2026 Resolved “No” Consistent with the withdrawn application; it provides no current forward-looking price. My assessment: these markets do not justify buying any of the ten stocks. Even a reliable approval probability is only one input. Shareholder value also depends on the approved indication, competing treatments, price, uptake, manufacturing costs, royalties and years of exclusivity. Much of a likely approval may already be reflected in the share price. 4. How much growth would justify today’s prices? A useful check is to work backwards from a desired return. Below, I calculate the earnings growth needed to produce 10% annual share-price appreciation over five years, using illustrative future P/E multiples. These future multiples are my scenario assumptions—not forecasts or independently established fair values. Dividends, tax and currency movements are excluded. Company Current forward P/E Assumed P/E in five years Required annual EPS growth AstraZeneca 14.7× 18× 5.6% Roche 16.6× 17× 9.4% Lilly 27.6× 25× 12.2% J&J 23.1× 18× 15.6% Merck 16.8× 13× 15.8% Novo Nordisk 11.8× 12× 9.7% The calculation is: Annual price return = earnings growth factor × annualised change in P/E − 1. This illustrates the central distinction: - AstraZeneca’s favourable result partly assumes its valuation rises. Without that increase, it would need 10% earnings growth. - Lilly can justify a premium through sustained growth, even with some multiple contraction. - J&J becomes demanding if its valuation returns to a lower level. - Novo still needs earnings recovery. A low starting multiple alone does not generate returns. 5. Would I invest? For a diversified investor with a five-year horizon, my present approach would be: 1. Start with AstraZeneca and Roche as the principal candidates. 2. Consider AbbVie or Gilead for additional exposure to established earnings. 3. Use Lilly for a deliberate growth allocation, accepting greater sensitivity to expectations. 4. Keep Novo smaller until sales, pricing and earnings stabilise. 5. Keep Novartis as a reasonable alternative, while adjusting expectations for its failed trials. 6. Wait on J&J, Merck and Amgen at these relative valuations. I would build positions in stages rather than commit the entire intended allocation before upcoming results and regulatory decisions. Owning several pharmaceutical companies also leaves shared exposure to drug pricing, reimbursement and clinical risk. My strongest conclusion is that AstraZeneca deserves the closest investment attention; Roche offers the next most balanced case. Novo is the most tempting apparent bargain, but also the easiest place to confuse a low multiple with undervaluation. This is a pipeline-informed valuation assessment, rather than a completed drug-by-drug cash-flow valuation. Exact position sizes would depend on your existing holdings—including employer shares—investment currency and tolerance for losses.