The pharmaceutical industry is well-positioned for significant expansion, driven by robust demand amid the growing prevalence of chronic diseases and an aging population, continued innovations and discoveries in drug discovery and development, and technological advances such as AI, big data analytics, and precision medicine.
Amid this backdrop, investors could consider investing in innovative pharmaceutical stocks Eli Lilly and Company (LLY), Bristol-Myers Squibb Company (BMY), and Merck & Co., Inc. (MRK) with game-changing treatments.
The healthcare industry is transforming rapidly with strong employment growth, increasing investment, and a steady capital influx driven by the rising demand for advanced healthcare solutions worldwide.
Despite downtrends like global inflation and uncertain market circumstances, pharmaceutical market is poised to expand with the increasing demand for personalization of drugs. Also, other key trends like patient care plans, technology adoption, improved quality and access, and growing mergers and acquisitions contribute to the market’s growth.
The projected revenue of the worldwide pharmaceuticals market is expected to reach $1.15 trillion in 2024. The market revenue is anticipated to grow at a CAGR of 4.7%, resulting in a market volume of $1.45 trillion by 2029. Also, in global comparison, the U.S. pharmaceutical market is expected to reach $764.06 billion by 2030, expanding at a CAGR of 5.5%.
Further, increased adoption of healthcare information technology systems, next generation sequencing technologies have resulted in the growth of the personalized medicine market. The global personalized medicine market is expected to reach $1.23 trillion by 2033, growing at a notable CAGR of 8.10%.
Moreover, the growing demand for personalized medicine to improve treatment outcomes and advancements in genomics and high-throughput technologies has led to the rising adoption of Artificial intelligence (AI) in the pharmaceutical market. Also, the integration of big data analytics with AI further creates lucrative opportunities for the market.
Given these favorable market trends, let’s look at the fundamentals of the top three Medical - Pharmaceutical stocks, beginning with the third choice.
Stock #3: Eli Lilly and Company (LLY)
LLY discovers, develops, and markets human pharmaceuticals globally. The company provides medicines for diabetes, obesity, rheumatoid arthritis, plaque psoriasis, ulcerative colitis, depressive disorder, and others. The company also offers oncology products.
On July 8, LLY entered into a definitive agreement with Morphic Holding, Inc. to acquire Morphic, a biopharmaceutical company developing oral integrin therapies for treatment of serious chronic diseases. The strategic acquisition reinforces LLY’s commitment to develop new therapies in gastroenterology and will expand its immunology pipeline with oral integrin therapies.
On July, LLY’s Kisunla™ (donanemab-azbt), an alzheimer's treatment for adults with early symptomatic Alzheimer's disease was approved by FDA. Kisunla is the first and only amyloid plaque-targeting therapy showing evidence to support stopping therapy when amyloid plaques are removed which can lead to lower treatment costs and fewer infusions.
Also, on June 5, LLY collaborated with OpenAI enabling LLY to leverage OpenAI’s generative AI to invent novel antimicrobials to treat drug-resistant pathogens. Antimicrobial resistance (AMR) is one of the top public health and development threats across the global health landscape.
The collaboration aligns with the company will open new avenues to accelerate novel antimicrobials discovery and the development of custom, purpose-built technologies against drug-resistant pathogens.
During the first quarter that ended March 31, 2024, LLY’s revenue increased 26% year-over-year to $8.77 billion. Its operating income grew 67.9% from the year-ago value to $2.51 billion. The company’s non-GAAP net income and EPS came in at $2.33 billion and $2.58, indicating increases of 59.5% and 59.3% from the prior year’s quarter, respectively.
According to its updated 2024 financial guidance, LLY expects revenue in the range of $42.40 billion - $43.60 billion, up from the prior guidance of $40.40-$41.60 billion. Also, its non-GAAP EPS is expected to be between $13.50 and $14, compared to the previous guidance of $12.20 - $12.70.
Street expects LLY’s revenue and EPS for the second quarter (ended June 2024) to increase 20.2% and 31.1% year-over-year to $9.99 billion and $2.77, respectively. Also, the company has topped the consensus EPS estimate in all of the trailing four quarters.
Shares of LLY have increased 22.5% over the past six months and 73.8% over the past year to close the last trading session at $790.21.
LLY’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth. Within the Medical - Pharmaceutical industry, LLY is ranked #35 out of 154 stocks.
Click here to access additional ratings of LLY for Momentum, Sentiment, Stability, Quality, and Value.
Stock #2: Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products globally. The company offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On July 19, BMY announced validation of its Type II variation application for Opdivo® (nivolumab) plus Yervoy® (ipilimumab) by the European Medicines Agency as a potential first-line treatment option for adult patients with unresectable or advanced hepatocellular carcinoma.
The application was based on Phase 3 CheckMate -9DW trial results demonstrating improved survival with Opdivo plus Yervoy.
On June 21, BMY announced that the U.S. FDA granted accelerated approval of KRAZATI® (adagrasib) in combination with cetuximab for adult patients with KRAS G12C-Mutated locally advanced or metastatic colorectal cancer.
On the same day, BMY announced that the European Medicines Agency validated the extension application to introduce a new route of administration for Opdivo® that includes a new pharmaceutical form and a new strength (600 mg/vial) across multiple previously approved adult solid tumor indications following completion of nivolumab plus ipilimumab combination therapy.
For the second quarter that ended June 30, 2024, BMY’s total revenues increased 8.7% year-over-year to $12.20 billion. Its non-GAAP gross profit rose 9.6% from the year-ago value to $9.23 billion. Non-GAAP net earnings attributable to BMS and non-GAAP EPS came in at $4.19 billion and $2.07, up 14.1% and 18.3% from the prior year’s quarter, respectively.
Street expects BMY’s revenue for the third quarter (ending September 2024) to increase 2.7% year-over-year to $11.26 billion. The company’s revenue for the fiscal year (ending December 2024) is expected to grow 3.6% year-over-year to $46.62 billion. Furthermore, the company surpassed the consensus revenue estimates in each of the trailing four quarters.
BMY’s stock soared 16.5% over the past month to close the last trading session at $49.05.
BMY’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
BMY has an A grade for Growth. It also has a B grade for Value and Quality. It is ranked #7 out of 154 stocks in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have BMY ratings for Sentiment, Momentum, and Stability. Get all BMY ratings here.
Stock #1: Merck & Co., Inc. (MRK)
MRK is a healthcare company operating globally. It operates through Pharmaceutical; and Animal Health segments. The company offers human health pharmaceutical products and the Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals.
On July 26, MRK received positive EU CHMP opinion for KEYTRUDA®, MRK’s anti-PD-1 therapy in combination wih Padcev® (enfortumab vedotin-ejfv) as the first-line treatment of adult patients with unresectable or metastatic urothelial carcinoma.
The opinion was granted based on positive overall survival and progression-free survival results from the Phase 3 KEYNOTE-A39 trial and marks a step forward for a potential new first-line standard of care for treating patients.
On July 23, MRK announced positive results from its Phase 2b/3 clinical trial (MK-1654-004) which evaluated clesrovimab (MK-1654), its investigational prophylactic monoclonal antibody designed to protect infants from respiratory syncytial virus disease.
On July 12, MRK completed the acquisition of Eyebiotech Limited making EyeBio its wholly-owned subsidiary. The acquisition strengthens and diversifies MRK’s pipeline through addition of Restoret™, a novel late-phase candidate for diabetic macular edema and neovascular age-related macular degeneration.
For the second quarter that ended June 30, 2024, MRK’s total sales increased 7.2% year-over-year to $16.11 billion, of which its sales from KEYTRUDA rose 15.9% year-over-year to $7.27 billion. The company’s non-GAAP net income and non-GAAP EPS came in at $5.81 billion and $2.28, against non-GAAP net loss of $5.22 billion and $2.06 per share in the prior year’s quarter.
MRK updated its full-year 2024 financial outlook. The company raised its sales outlook from the range of $63.10 and $64.30 billion to range between $63.40 and $64.40 billion now. And its non-GAAP EPS is expected to be $7.94 to $8.04.
Analysts expect MRK’s revenue and EPS for the fourth quarter (ending December 2024) to increase 8.3% and 6690.1% year-over-year to $15.85 billion and $2.04, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is remarkable.
MRK’s stock has climbed 8.1% over the past year to close the last trading session at $115.25.
MRK’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
MRK has an A grade for Growth. The stock has a B for Sentiment, Value, Quality, and Stability. MRK is ranked #2 of 154 stocks in the Medical - Pharmaceuticals industry.
To access all ratings of MRK, click here.
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LLY shares were trading at $801.39 per share on Wednesday afternoon, up $11.18 (+1.41%). Year-to-date, LLY has gained 37.95%, versus a 16.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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