Pharmaceutical and biotech stocks often are seen as steady and safe options for investors for one particular reason. Patients need their medications, so regardless of the economic environment, these companies generally see at least stability in revenue. But it's important to note that you can turn to these players for growth too.
Drugmakers often see phases of growth as they develop candidates for a high-potential treatment area or as they launch promising new products. Over time, you can benefit from these periods and score a win by buying shares of certain biotech and pharma companies and holding for the long term.
Now, as we look ahead to the new year, I'll look even farther into the future -- since these companies usually need time to develop and launch the products that serve as catalysts. And I'll make a prediction: The following three players could be the best-performing pharma and biotech stocks through 2030.
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1. Viking Therapeutics
Viking Therapeutics (VKTX -3.56%) doesn't yet have products on the market, but it's advancing into late-stage clinical development in an area of high demand: weight loss. The biotech's candidate VK2735 belongs to the same class of drugs as Eli Lilly's star weight loss drug Zepbound -- it acts on hormonal pathways to help control blood sugar levels and appetite.
In injectable format, VK2735 is set to enter phase 3 development; the oral formulation is getting ready to enter phase 2. Viking's stock price has been known to soar on good news from the program, with shares jumping 121% in one trading session after phase 2 results of the injectable formulation were announced back in February. It's clear that additional positive news from the program could boost the stock -- and as the company progresses through late-stage trials over the next few years, we should expect more data.
Though Eli Lilly and Novo Nordisk dominate the weight loss market, Viking could carve out a share. Demand for these drugs has surpassed supply for quite some time, and Goldman Sachs Research predicts the market may reach $130 billion by 2030. All of this could help Viking Therapeutics soar in the coming years.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.46%) is the global leader in cystic fibrosis drugs, and these products have helped the company generate billions of dollars in revenue and profit and build up $11 billion in cash as of the recent quarter. This cash level is useful in what Vertex is doing now: expanding into other treatment areas.
One of these could be especially significant in the years to come: Vertex's candidate to treat a very common problem -- pain. Today, options are limited to over-the-counter painkillers, which may sometimes be ineffective, or opioids, which have been linked to addiction. Vertex's non-opioid candidate suzetrigine fills the gap, treating cases of moderate-to-severe acute pain. The company is waiting on regulators right now, with a decision expected by Jan. 30.
Vertex continues to develop suzetrigine for specific pain indications. One important one is lumbosacral radiculopathy -- the cause of sciatica -- in which it recently completed a phase 2 trial.
Vertex has said suzetrigine would provide it a multibillion-dollar opportunity. This, along with its solid CF portfolio, could keep the stock climbing over the long run.
3. Pfizer
Pfizer (PFE 0.23%) stock has suffered in recent times as the company's coronavirus treatment and vaccine revenue have declined significantly from early-pandemic highs. But the pharma giant's launch of 19 products over a period of 18 months -- the most ever in such a short time -- should result in growth drivers to power revenue throughout this decade. On top of this, Pfizer has also made some acquisitions to help do the job, and a key one is in the area of oncology.
This big pharma player bought Seagen, a specialist in antibody-drug conjugates (ADCs); these use the ability of monoclonal antibodies to directly target cancer cells with powerful cancer drugs. Pfizer aims to become a leader in oncology, and seems to be on the way. In the first half of this year, it was the third-biggest oncology company in the U.S. by revenue. And in the most recent quarter, strong demand across the Seagen and Pfizer portfolios resulted in a 31% increase in oncology product revenue.
Pfizer also has set a major goal for 2030: By that time, it aims to have eight or more blockbuster oncology drugs and to double the number of patients treated with its oncology medicines. If the company makes progress toward this goal and other new products generate growth, this down-on-its luck stock may become one of the best performers in the next several years.
