The year has proven to be an uphill battle for most U.S. drugmakers, with big pharma giants like Pfizer and Bristol Myers Squibb experiencing a decline in their stock value amidst a positive trend in the broader S&P 500, which has seen a 16% climb since the start of 2023.
In addition to this slump, biotech stocks are facing a multiyear low, while makers of generic drugs are also encountering difficulties.
Nevertheless, amidst this challenging landscape, a few names have managed to thrive and even outperform the S&P 500. Identifying these pharmaceutical and life sciences stocks that have defied the odds can provide valuable insights into the market’s trends for investors.
To uncover these promising stocks, we examined the S&P 500 Pharmaceuticals Biotechnology & Life Sciences industry group index. So far this year, the index has gained 0.9%. We specifically looked for constituents within the index whose share prices have increased by at least 5% during the same period.
Out of the 29 stocks within the index, six have passed this screening process: West Pharmaceutical Services (WST), Eli Lilly (LLY), Zoetis (ZTS), Vertex Pharmaceuticals (VRTX), Regeneron Pharmaceuticals (REGN), and IQVIA Holdings (IQV). Interestingly, the top two performers share a common factor: the surge in investor enthusiasm surrounding the new weight loss drugs known as GLP-1 receptor agonists.
Lilly Emerges as the Most Valuable Pharmaceutical Company in History
Lilly, the manufacturer of the highly promising GLP-1 receptor agonists, has experienced a remarkable surge in its stock, with a 47.1% increase as of early Tuesday. The company’s market value has now surpassed $500 billion, establishing it as the most valuable pharmaceutical company to date.
Anticipation is high for Lilly’s diabetes drug, Mounjaro, which is expected to obtain approval from the Food and Drug Administration as a weight-loss treatment by year-end. Furthermore, industry experts predict that Mounjaro will break the sales records for any medicine in history before the end of this decade.
West Capitalizes on Increased Demand for Delivery Devices
West, a contract manufacturer specializing in producing delivery devices for medications such as GLP-1s, has also benefited from the growing popularity of Lilly’s medicines. As the demand for GLP-1 agonists continues to skyrocket, so do West’s sales prospects.
Other Noteworthy Performances in the Pharmaceutical Industry
The animal health company Zoetis has had an exceptional year, outperforming the broader S&P 500. Excitement surrounds Zoetis’ upcoming launch of a new pain medicine for dogs called Librela. Meanwhile, Vertex, a biotech company, is garnering investor interest with its development of a non-opioid pain reliever.
Regeneron, a prominent biotech firm, and IQVIA, which conducts clinical trials for pharmaceutical companies, have also seen their stocks rise this year, although they trail behind the S&P 500.
Single Focus on Weight-Loss Drugs Prevails in Healthcare Investment
In the healthcare sector, investors appear to be fixated on weight-loss drugs and less interested in other areas. Despite numerous advancements and opportunities within the industry, weight-loss medications currently dominate the investment landscape.
It remains to be seen how long this singular focus will persist.