3 pharmaceutical stocks with strong prospects

New drug discovery and development is fascinating to read about, and the technology used is sometimes quite astounding, but for regular investors, where do you start to research? Like all companies, you start with the financials, but understanding the drug markets requires the same reading and update coverage as any other company.

Here are three that have been making advances in science and share price.

Alchemia Limited  (ASX: ACL) ($0.59)

Developer of therapeutics for targeted cancer delivery and drug discovery, its U.S. Food and Drug Administration (FDA) approved drug Fondaparinux, an anti-coagulant drug, is successfully being sold in the U.S. through its marketing partner Dr. Reddy’s Laboratories.

In the September quarter, its profit share from sales was A$3 million, bringing total profit share for the past four quarters to $10.51 million.

2013 annual operating revenue was $10.1 million, its highest ever annual result. However, it still turned a net loss after tax of $4.7 million for the year. Further growth in this drug’s sale, as well as expanding it into new markets could see higher earnings.

Sirtex Medical Limited (ASX: SRX) ($13.90)

The biotech and medical device company specialises in treating liver cancer using small particle technology called SIR-Spheres microspheres, which allow radio-therapy to be conducted at the source of the cancer without needing to expose surrounding tissue to the radiation.

Both revenue and earnings have been generally rising over the past four years with NPAT of $18.27 million on $97.8 million total revenue in 2013.

The company is planning to open more centres in Canada and Latin America, but it is experiencing strong growth in Asia with sales up 26%.

CSL Limited  (ASX: CSL) ($70.78)

This $34.3 billion biopharmaceutical company specialises in developing products for blood disorders, bacterial and viral diseases.

In 2013, it raised NPAT by 33.4% from $982.6 million to $1.31 billion, returning it to profit levels it achieved in 2010-2011. The company is currently conducting a share buyback worth up to $765 million, of which it has bought back $184.51 million worth of shares as of 20 December.

Foolish takeaway

Drugs have long periods of development, so you need to see that a company has a long and wide pipeline of product development to make sure earnings keep coming.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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