These 3 Healthcare Companies Had the Top-Selling Drugs Last Year

You might think that if a drugmaker has a top-selling drug, it would be a lock to be a top-performing stock and a no-brainer buy. That may be true in some cases. In others, it can be a source of risk as investors grow concerned about what a company's growth opportunities will look like after the relevant patent expires, especially when the drug accounts for a significant chunk of the company's sales.

The three top-selling drugs in 2023 came from Merck (NYSE: MRK) , AbbVie (NYSE: ABBV) , and Novo Nordisk (NYSE: NVO) . Here's a closer look at those blockbusters, how much revenue they brought in, what their growth prospects look like, and whether these stocks make for good investments today.

Merck: Keytruda ($25 billion)

At a whopping $25 billion in sales in 2023, Keytruda was far and away Merck's top-selling drug last year. It accounted for just under 42% of the company's revenue. The cancer drug has been extremely successful in helping to extend the life of patients, and the Food and Drug Administration has approved it for many different indications. Keytruda's sales grew by 21% last year when you exclude the impact of foreign exchange. Analysts believe that its sales could still rise higher, topping $33 billion in 2027, before biosimilars begin to enter the market.

The big question for Merck is how it can account for its looming patent cliff and make up for the inevitable drop in sales. The company has been developing new drugs and acquiring businesses to soften the blow. One particularly attractive asset is Winrevair, a medication for pulmonary arterial hypertension; at its peak, it may generate $5 billion in sales.

Merck still has multiple years to bring new products to market, but there's no question that Keytruda's patent cliff could become a problem. Now  trading at 14 times estimated earnings , the stock is at a bit of a discount. If you're comfortable with a bit of risk and uncertainty ahead, it may be worth adding it to your portfolio.

AbbVie: Humira ($14.4 billion)

Humira is AbbVie's top-selling drug for arthritis. At $14.4 billion, it did bring in a lot of revenue in 2023 -- 27% of the company's overall sales. The drug's sales have already begun to decline due to rising competition, and they were down more than 32% this past year.

The company, however, has a couple of fast-growing immunology drugs in Skyrizi and Rinvoq, which management expects to combine for higher peak sales than Humira. Last year, their sales already totaled $11.7 billion.

As a result, there's a bit less risk, as the business has been working on its growth strategy. By next year, it expects a "return to robust growth" and forecasts that it will achieve a high-single-digit annual growth rate afterward. AbbVie stock trades at 18 times its future earnings estimates, and makes for a potentially undervalued stock for investors to buy and hold right now.

Novo Nordisk: Ozempic ($13.9 billion)

The one drug on this list that isn't facing patent expiration anytime soon is Ozempic. In most markets, including the U.S., it won't lose patent protection until the next decade. That's good news for Novo Nordisk: Not only did the drug achieve 66% revenue growth last year (excluding foreign exchange) but it also accounted for more than 41% of the company's total sales.

The bigger risk for investors is that new weight loss treatments may emerge which could chip away at Ozempic's sales growth. Although it's technically approved for diabetes, patients have been taking Ozempic off-label for weight loss, as it can help people lose more than 15% of their body weight on average. I wouldn't expect it to remain a top drug, only because Novo Nordisk now has an approved weight loss drug in Wegovy, which could overtake Ozempic in the not-too-distant future.

No matter what, Novo Nordisk is a top healthcare stock to invest in; it offers a great way to tap into potential growth opportunities in both weight loss and diabetes care. That's why the stock is the only one on this list that doesn't come cheap -- it trades at a forward price-to-earnings multiple of 38. But despite its high price tag, it can still be a good buy given the company's fantastic growth opportunities. Novo Nordisk expects revenue growth of 22% to 28% this year.

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy .