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The pharmaceuticals and biotech industry has been blessed with good health so far this year. The sector has recovered from the pricing controversy of 2016 and defied uncertainties surrounding President Trump’s proposed healthcare policy.

The NYSE ARCA Pharmaceutical Index has risen almost 9.8% year to date after declining almost 11.1% last year. Even the NASDAQ Biotechnology Index is up 26.8%, after sliding 22% in 2016.

In fact, the Zacks Drug sector is up 9.5% year to date. Importantly, the Zacks biotech sector ranks amongst the top 35% of the Zacks industries.

The Medical sector, which includes both pharmaceutical/biotech and medical device companies, recorded earnings growth of 6.7% on revenue growth of 4.2% in Q2. The beat ratio for earnings and revenues was 83.3% was and 64.8%, respectively, in the quarter under review (as of Aug 25, 2017).

Within the Medical sector, biotech stocks have performed well in the first half of the year, despite challenges like rising competition, pipeline setbacks, slowdown in growth of mature products and generic competition for certain key drugs. Some of the companies also raised their guidance for 2017. Additionally, sales of newly launched drugs hold potential to mitigate the impact of genericization of key drugs to an extent. Moreover, the companies are also focusing on bringing newer candidates and categories (gene editing, NASH and Parkinson's disease) in the market.

Key Picks

Given this scenario, it might be the perfect time to dip your toe in to this growing market. Here are four big pharmaceutical/biotech stocks that carry a favorable rank and can prove lucrative additions to your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alexion Pharmaceuticals, Inc. (ALXN - Free Report)

The company is witnessing strong sales figure for its blockbuster drug, Soliris and making efforts expand the label. Notably, FDA’s decision regarding the approvability of Soliris for refractory generalized myasthenia gravis (gMG) is expected by Oct 23, 2017. The potential approval of Soliris for this indication is likely to boost the top line.

Among the company’s other new products, the drug Strensiq is doing well while it has redefined strategy for Kanuma which has lagged expectations previously. The company expects Strensiq to be a strong additional catalyst this year and beyond. In order to focus better in core areas, Alexion is de-prioritizing a few clinical programs and terminating partnerships with Moderna Therapeutics, Blueprint Medicines and Arbutus Biopharma.

Alexion, a Zacks Rank #1 stock, has seen the Zacks Consensus Estimate for earnings rise 5.5% and 6% for 2017 and 2018, respectively in the last 60 days. The company delivered positive earnings surprises in the trailing four quarters, with an average beat of 11.12%.

Per the Zacks Consensus Estimate, sales are expected to grow 14.28% and 15% on year-over-year basis in 2017 and 2018, respectively. Meanwhile, earnings are expected to grow by 21.50% in 2017 and 23.35% in 2018.

Shares of the company have risen 19.7% year to date, outperforming the gain of 10.8% witnessed by the industry.

Regeneron Pharmaceuticals, Inc. (REGN - Free Report)

Tarrytown, NY-based Regeneron’s key growth driver, Eylea, continues to drive revenues. Consequently the company is expanding the drug's label for additional indications which would give Eylea access to higher patient population and increase its commercial potential.

The company has also been working on diversifying its portfolio and gained FDA approval for two drugs this year -- Dupixent (atopic dermatitis) and Kevzara (rheumatoid arthritis). Both drugs developed in partnership with Sanofi (SNY - Free Report) have blockbuster potential.

Dupixent, which could prove to be an important growth driver for the company and the company is also working to expand the label of Dupixent and anticipates filing for regulatory approval in the United States for the treatment of asthma in adults in fourth-quarter 2017.

Regeneron has observed the Zacks Consensus Estimate for current-year earnings, advancing 16.7% in the last 30 days. Earnings for 2018 has risen 7.9%. The company sports a Zacks Rank #1, and its shares have surged 36.7% year to date, outperforming the industry's gain of 10.7%. The company delivered positive earnings surprises in two of the trailing four quarters, with an average beat of 10.11%.

Per the Zacks Consensus Estimate, sales are expected to grow 18.67% and 8.6% on year-over-year basis in 2017 and 2018, respectively. Earnings are anticipated to grow by 32.42% and 9.99% in 2017 and 2018, respectively.

Ligand Pharmaceuticals Inc. (LGND - Free Report)

The company’s Captisol formulation technology has resulted in partnerships with several leading drug companies like Novartis and Amgen. Notably, these tie-ups have provided it with funds in the form of milestone and royalty payments. Moreover, Ligand's internal pipeline has several candidates in development that are likely to develop in to future licensing opportunities. Nonetheless, the company’s entry into the Medical Devices Segment with the acquisition of multiple programs owned by CorMatrix is also encouraging.

Ligand has seen the Zacks Consensus Estimate for earnings advancing 10.4% in the last 30 days for 2017 and 2.2% for 2018. The company flaunts a Zacks Rank #1, and shares of the company have risen 26.4% so far this year, outperforming the gain of 10.7% of the industry it belongs to. The company delivered positive earnings surprises in two of the preceding four quarters, with an average beat of 6.19%.

Per the Zacks Consensus Estimate, sales are expected to grow 23.78% and 31.91% on year-over-year basis in 2017 and 2018, respectively. Earnings are expected to grow by 38.60% in 2017 and 25.17% in 2018.

Gilead Sciences, Inc. (GILD - Free Report)

Gilead is a dominant player in the HIV and hepatitis C virus (HCV) market with an impressive portfolio for the same. The company’s HIV franchise maintains momentum driven by the rapid adoption of TAF-based regimens in the United States and EU, which now represents 51% of total HIV prescription volume as of June end. Genvoya is now the company’s bestselling HIV product with a treatment-naïve patient share of 41%.

Further, strong uptake for Truvada for use in the pre-exposure prophylaxis setting is likely to boost sales. Gilead raised outlook for the year at the second-quarter 2017 conference call.

Recently, the company announced that it will buy Kite Pharma, Inc. . The acquisition will diversify Gilead’s portfolio and position it as a dominant player in cellular therapy space. The deal is expected to close in the fourth quarter of this year.

The company has seen the Zacks Consensus Estimate for 2017 earnings increasing 7.4% in the last 60 days and 1% for 2018. Gilead carries a Zacks Rank #2 (Buy), and shares of the company have gained 16.4% so far this year, outperforming the industry advance of 10.7%. The company delivered positive earnings surprises in two of the trailing four quarters, with an average beat of 6.38%.

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