Although the healthcare sector has generally underperformed the broader market in recent years, there are still targets with long-term investment value within the industry. Regeneron Pharmaceuticals (REGN), a leader in the biotechnology field, is poised to outperform the market over the next decade, leveraging its core product advantages and a rich research and development pipeline.
Currently, the most important product supporting the company’s revenue growth is Dupixent. This drug, developed in collaboration with Sanofi, has been approved for indications such as eczema and holds a leading position in its therapeutic areas. In 2024, the drug achieved a significant milestone with the approval of a new indication for chronic obstructive pulmonary disease. Benefiting from this, despite a sales decline in its other flagship product, Eylea, due to increased competition, Regeneron still reported a 3% year-over-year increase in fourth-quarter revenue, reaching $3.9 billion.
It is worth noting that due to the impact of biosimilars, the ophthalmic product line, including Eylea and its high-dose version Eylea HD, saw a sharp 28% year-over-year decline in U.S. sales in the fourth quarter. However, analysts point out that Dupixent’s patent protection extends into the early 2030s, meaning this product will continue to drive the company’s growth for the next five years.
To reduce its reliance on a single product, Regeneron is accelerating the development of new drugs. Last year, the company received approval for its new cancer drug, Lynozyfic. Its current pipeline covers multiple areas, including weight management, oncology, immunology, and rare diseases, such as a gene therapy for a specific type of hereditary deafness. It is worth emphasizing that over 12 candidate drugs are currently in Phase III clinical trials, spanning therapeutic areas like immuno-inflammation, cardiovascular diseases, and oncology.
While the development of new drugs carries inherent risks, the company’s deep research reserve provides a buffer against the Eylea patent expiration in 2026 and the Dupixent patent cliff expected in the early 2030s. As more new drugs are launched, the company’s product portfolio is expected to become more diversified by 2036, laying the foundation for continued market outperformance.
As a biotechnology company established over 35 years ago, Regeneron has built a solid business foundation in inflammation, cardiovascular diseases, and ophthalmology. Its flagship product, Dupixent, covers eight inflammation-related diseases, including asthma and atopic dermatitis, and has been used by over one million patients globally.
Currently, the company’s forward price-to-earnings ratio is approximately 17x, down from valuation levels above 25x in the second half of 2024. Based on its consistent growth record and robust pipeline, the stock’s current valuation appears highly attractive.
