To The Moon

While the healthcare sector has underperformed the broader market in recent years, there are still plenty of stocks with long-term investment value within the industry. $Regeneron Pharmaceuticals(REGN)$ , a leading enterprise in the biotech space, is well-positioned to outperform the market over the next decade, backed by its core product strengths and a robust research and development (R&D) pipeline.

Core Growth Driver Maintains Strong Momentum

Dupixent currently stands as the company’s most critical product driving revenue growth. Co-developed with Sanofi, this drug has been approved for indications such as atopic dermatitis and holds a leading position in its therapeutic areas. In 2024, Dupixent achieved a major milestone with the approval of a new indication for chronic obstructive pulmonary disease (COPD). Thanks to this progress, Regeneron’s fourth-quarter revenue still rose 3% year-over-year to $3.9 billion, even as sales of Eylea, another flagship product, declined amid intensifying competition.

Notably, hit by biosimilar competition, sales of the company’s ophthalmic product line—including Eylea and its high-dose version Eylea HD—plunged 28% year-over-year in the U.S. market in the fourth quarter. However, analysts point out that Dupixent’s patent protection will last until the early 2030s, meaning the product will continue to fuel the company’s growth over the next five years.

Diversification Strategy Bears Early Fruit

To reduce its reliance on a single product, Regeneron is accelerating the development of new drugs. Last year, the company secured approval for Lynozyfic, its novel anti-cancer drug. Its current R&D pipeline spans multiple areas including weight management, oncology, immunology and rare diseases, with offerings such as a gene therapy for specific hereditary hearing loss. Importantly, more than 12 drug candidates are currently in Phase III clinical trials, covering therapeutic areas like immune inflammation, cardiology and oncology.

While new drug development inherently carries risks, the company’s substantial R&D reserves provide a buffer against the patent expiration of Eylea in 2026 and the upcoming patent cliff of Dupixent in the early 2030s. As more new drugs are launched successively, the company’s product portfolio is expected to become far more diversified by 2036, laying a solid foundation for sustained market outperformance.

As a biotech firm with over 35 years of history, Regeneron has built a solid business foundation in the areas of inflammatory, cardiovascular and ophthalmic diseases. Dupixent, its flagship product, is approved for 8 inflammation-related conditions including asthma and atopic dermatitis, with over one million patients worldwide currently on the medication.

The stock currently trades at a forward price-to-earnings ratio of approximately 17x, a pullback from the above-25x valuation seen in the second half of 2024. Supported by its track record of consistent growth and a well-stocked R&D pipeline, Regeneron’s current valuation offers compelling investment appeal.

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