Forget Amarin: This Oft-Overlooked Pharma Powerhouse Is a Better Buy Now

Broader equities have been relatively volatile over the past few months. In an environment like this, it's best to prioritize investing in well-established, profitable corporations. While small-cap stocks may have higher upside potential than much larger companies, the risks they entail often make them not worth investing in.

With that as a backdrop, let's consider one smaller company that has performed pretty well over the trailing-12-month period, but isn't worth your time: Amarin (NASDAQ: AMRN). Instead of betting on this small drugmaker, it's best to put your hard-earned money into a pharmaceutical leader like Novartis (NYSE: NVS) instead.

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Amarin's prospects are bleak

Amarin's shares have climbed about 22% over the past year. However, the stock's future looks uncertain at best. While Amarin does have an approved product on the market, Vascepa, a medicine used to reduce the risk of various cardiovascular events, there have been generics of this drug on the market for years. As a result, sales are moving in precisely the wrong direction. In its fiscal 2025, total revenue decreased by 6.5% year over year to $213.6 million.

Despite losing patent exclusivity for its sole approved product, Amarin has a plan to improve its business. In fact, it has already made progress along those lines. One of its goals was to cut costs, notably by reducing its workforce. In 2025, Amarin's net loss per share was $0.09, significantly better than the $0.20 reported in 2024. This progress, despite the decreased sales, is noteworthy.

It's also worth noting that Amarin is engaged in a legal battle with generic-drug maker Hikma Pharmaceuticals, claiming that Hikma marketed its generic version of Vascepa in ways that infringed on a still-patented use of the original medicine. The case has now reached the U.S. Supreme Court. If Amarin wins, its shares will likely soar.

Elsewhere, Amarin has switched its strategy for its lone approved product. For instance, it has partnered with Italian company Recordati Industria Chimica e Farmaceutica to commercialize Vascepa in 59 countries, primarily in Europe. Amarin received an up-front payment of $25 million for this deal and could earn up to $150 million based on various milestones, while shifting the commercialization expenses and generic-related risks to another company.

These efforts are commendable, but Amarin still faces significant risks. With no pipeline candidates and revenue that essentially depends on a single, off-patent product, its prospects don't look attractive at all. It's best to avoid this biotech stock.

A completely different proposition

There are significant differences between Amarin's business and that of Novartis: The latter has a large product lineup across many therapeutic areas. Novartis records consistent revenue and earnings. Its sales in 2025 came in at $54.5 billion, up 8% year over year, while its earnings per share rose 15% to $8.98.

Even with patent-exclusivity losses for key products, Novartis' extensive portfolio means it can recover, even if it has to endure a year or two of declining sales. Case in point: The company lost patent protection for its best-selling product, Entresto, which treats chronic heart failure, last year. However, Novartis still expects its sales to grow, albeit slightly, in 2026.

Another difference between the two companies is Novartis' deep pipeline. The pharmaceutical giant is running dozens of clinical trials, at least some of which will lead to brand-new approvals and label expansions. Some of its newer products are already having a meaningful impact on financial results, which is why the loss of Entresto's patent isn't a death blow. Fabhalta, a medicine for a pair of rare disorders first approved in December 2023, generated revenue of $505 million in 2025, up 291% year over year.

Novartis may not grab as many headlines as some other leading pharmaceutical companies, particularly those that currently dominate the hot, rapidly expanding weight-loss market. But it has a robust underlying business and has seen its shares soar by about 59% over the trailing 12 months; it could perform well over the long run. It's also an excellent dividend stock, considering that the company has increased its payouts every year since 1996. For all those reasons, Novartis is a far better buy than Amarin.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends Hikma Pharmaceuticals Plc. The Motley Fool has a disclosure policy.