The market’s recent declines have thrown up some great bargains for Foolish investors who aren’t afraid to invest against the grain. Three such bargains are Hikma Pharmaceuticals (LSE: HIK)Shire (LSE: SHP) and AstraZeneca (LSE: AZN).

These three highly defensive pharma stocks are now trading at their lowest valuations in more than two years, presenting a rare opportunity for long-term investors. 

Pipeline worries 

2016 is going to be a tough year for Astra. The company is set to lose patent protection on its blockbuster Crestor blood thinner this year, and at the beginning of February management warned that as a result of patent expirations, Astra’s sales and earnings would fall by a “low to mid-single-digit percentage” in 2016. Many City analysts believe that Astra’s sales declines will be at the lower end of the range mentioned above. 

Still, while Astra’s earnings are set to fall next year, management believes the company is still on track to increase revenues by three-quarters to $45bn by 2023. Astra’s management is pinning its hopes on the group’s best-in-class pipeline of opportunities, new drugs such as Brilinta, an anti-clotting drug, Durvalumab, and AZD9291. What’s more, to complement organic product development, Astra acquired several assets in a $10bn shopping spree last year to bolster its product pipeline and the group has had some success recently with the development of new oncology drugs. 

All in all, Astra’s near-term outlook might be worrying, but as new treatments come to market, the group should return to growth. Investors will get paid to wait for the company’s recovery as Astra currently supports a yield of 4.8%. The payout is covered one-and-a-half times by earnings per share, so it looks safe for now. 

Deal concerns 

Market jitters have pushed Shire’s shares to a 52-week low this week despite the fact that the company is now in a stronger position that it ever has been before. A string of deals has strengthened the company’s treatment pipeline, and pre-tax profit is expected to grow by 11% this year. Earnings per share are set to increase by 12% for 2016 and after recent declines, the company’s shares are trading at a forward P/E of only 16, a five-year low excluding one-off items. 

Shire’s shares currently support a dividend yield of 0.4%, which isn’t much, but the payout is covered more than 15 times by earnings per share, leaving plenty of room for payout growth. 

Buyout jitters 

Last year, Hikma agreed to pay $2.65bn in cash and shares for peer Roxane. However yesterday, Hikma said Roxane’s sales in 2015 were lower than the $680m it had estimated. As a result, Roxane’s price tag has been reduced, from $1.18bn to $647m. Hikma is buying Roxane for its pipeline, not the company’s products. In theory if everything goes to plan, over the long-term Hikma should benefit from the sudden reduction in price. 

Hikma’s earnings per share have expanded 130% since 2010 and City analysts have pencilled-in EPS growth of 16% for 2016. Based on this forecast the company is trading at a forward P/E of 23.2. Hikma’s shares only offer a token dividend yield of 0.7%, although the payout is covered five times by earnings per share. If the company can repeat its performance of the last five years, a valuation of 23.2 times earnings for Hikma’s shares seems appropriate. 

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca and Hikma Pharmaceuticals. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.