The drug and biotech sector saw a strong first half of 2024, driven by an increase in mergers and acquisitions (M&A), robust earnings, and pipeline and regulatory successes. The Zacks Large Cap Pharmaceuticals industry rose 19.3% in the first half of 2024. However, there was a major downturn in the second half due to overall disappointing third-quarter sales and profits, guidance cuts, pipeline setbacks and the appointment of Robert F. Kennedy Jr., a vaccine skeptic, as the head of Health and Human Services. The industry has declined more than 11% in the past six months, underperforming the S&P 500 index, as seen in the chart below.

Image Source: Zacks Investment Research

Nonetheless, despite the see-saw performance, a few big drugmakers like Gilead (GILD Quick QuoteGILD - Free Report) , Eli Lilly (LLY Quick QuoteLLY - Free Report) , Vertex Pharmaceuticals Incorporated (VRTX Quick QuoteVRTX - Free Report) and AbbVie (ABBV Quick QuoteABBV - Free Report) have outperformed the industry this year, as seen in the chart below:

Image Source: Zacks Investment Research

Moreover, these stocks are also well poised to keep their momentum alive in 2025.

In this article, we discuss how these four companies performed this year and the factors that are likely to drive their growth in 2025.

Gilead

Gilead is a dominant player in the HIV market. It has successfully transitioned its HIV portfolio to drugs with improved long-term safety profiles. In HIV, its flagship therapy, Biktarvy, continues to maintain strong growth, thereby fueling the company’s top line, a trend expected to continue in 2025. The approval of new therapies like Sunlenca (lenacapavir) has further strengthened the franchise. Gilead projects HIV sales to grow 5% in 2024.  The successful development and potential approval of lenacapavir for HIV prevention or PrEP should solidify Gilead’s HIV franchise, as lenacapavir needs to be taken twice yearly, unlike daily oral pills.

Gilead’s oncology portfolio, comprising the Cell Therapy franchise and breast cancer drug Trodelvy, has diversified the company’s overall business. However, the Cell Therapy franchise, comprising Yescarta and Tecartus, is under pressure due to competitive headwinds, which are expected to continue in 2025. Breast cancer drug Trodelvy has performed well since its approval.

Gilead is also strengthening its liver disease franchise with new treatments like Hepcludex. However, pipeline setbacks have been a concern for Gilead in 2024, a factor to watch out for in 2025.

This Zacks Rank #3 (Hold) stock has risen 13.2% so far this year. Estimates for its 2024 earnings per share have increased from $3.77 to $4.36 over the past 60 days while that for 2025 have risen from $7.27 per share to $7.55 per share.

Eli Lilly

Lilly has seen stupendous success with its tirzepatide medicines, Mounjaro for type II diabetesand Zepbound for obesity. Despite a short time on the market, Mounjaro and Zepbound became key top-line drivers for Lilly in 2024, with demand rising rapidly. Mounjaro and Zepbound generated sales of $11.0 billion in the first three quarters of 2024, accounting for around 45% of the company’s total revenues.

Though demand for the two drugs remains massive, Mounjaro and Zepbound’s sales were hurt due to inventory issues in the third quarter. This led the shares of the company to drop after third-quarter results following a powerful first-half performance. Nonetheless, the company is balancing the demand and supply of Mounjaro and Zepbound and the launch of the drugs in international markets. Lilly expects to increase demand activities for Mounjaro and Zepbound in the fourth quarter, which should benefit sales in 2025. The launch of Mounjaro in new international markets is expected to contribute to the drug’s sales in the fourth quarter and in 2025.

Lilly’s revenue growth is expected to continue to be driven by higher demand for Mounjaro, Zepbound, Verzenio and others, making up for the decline in sales from Trulicity. Other new drugs like Omvoh for ulcerative colitis, Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia and Kisunla (donanemab) for early symptomatic Alzheimer's disease should support Lilly’s top-line growth in 2025. Also, Lilly looks well placed to get approval for several new drugs and label expansions for marketed drugs, including Mounjaro and Zepbound, in the next few years.

Lilly is a #3 Ranked stock.

Estimates for Lilly’s 2024 earnings have declined from $14.63 to $13.17 per share over the past 60 days. For 2025, earnings estimates have declined from $24.16 to $23.99 per share over the same timeframe. Lilly’s stock has risen 33.4% so far this year.

Vertex

Vertex enjoys a dominant position in the cystic franchise (“CF”) market. Vertex’s CF sales continue to grow, driven by its triple therapy, Trikafta/Kaftrio, in younger age groups. While in the near term, expansion to younger age groups should continue to drive CF sales growth, the potential launch of Vertex’s fifth CFTR modulator therapy, vanza triple, should drive growth in the medium term.

Its one-shot gene therapy, Casgevy, developed in partnership with CRISPR Therapeutics, was approved for two blood disorders in multiple regions, which diversified its commercial opportunity.

Vertex is preparing for two potential near-term launches — suzetrigine in acute pain and vanza triple in CF — in 2025. Regulatory applications seeking approval for both suzetrigine and vanza triple are under review, with FDA decisions on both expected in January.

Vertex is rapidly advancing its mid- and earlier-stage pipeline, with multiple data readouts expected in the coming 12 months. The Alpine acquisition added povetacicept to Vertex’s pipeline. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for the cause of multiple serious autoimmune diseases. Vertex believes povetacicept has a “pipeline in a product” potential.

Vertex has a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So far this year, the stock has risen 15.1%. The Zacks Consensus Estimate for 2024 earnings has risen from 17 cents to 50 cents over the past 60 days. For 2025, earnings per share estimates have risen from $16.96 to $18.55 over the past 60 days.

AbbVie

Sales of AbbVie’s blockbuster drug, Humira, are declining due to loss of exclusivity and biosimilar erosion. However, AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications.

Strong sales performance of drugs like Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs like Ubrelvy, Elahere, Epkinly and Qulipta, should keep driving the company’s top line in 2025. However, AbbVie is seeing declining sales of Juvederm fillers in the United States and China, which will be a headwind in 2025.

Boosted by its new product launches, AbbVie expects to return to robust mid-single-digit revenue growth in 2025 with a high single-digit CAGR through the end of the decade.

AbbVie has also been on an acquisition spree in the past couple of years, which is strengthening its pipeline. It has signed several M&A deals in the immunology space, its core area, while also signing some early-stage deals in oncology and neuroscience areas.

AbbVie has a Zacks Rank #3.

So far this year, the stock has risen 10.7%. The Zacks Consensus Estimate for 2024 earnings has risen from $10.87 to $10.96 per share over the past 60 days. For 2025, earnings estimates have risen from $12.10 to $12.25 per share over the past 60 days.