4 Drug stocks have increased by more than 40% since the start of the year with room for growth in 2023

The pharmaceutical and biotechnology sector is expected to experience a favorable operating environment in 2023 despite macroeconomic uncertainty and the increasing risk of a global recession.

The pharmaceutical and biotechnology sector rebounded in the second half of 2022 after a rather weak performance in the first half. An uptick in M&A deals, strong earnings, new drug approvals, a favorable regulatory environment and pipeline success have helped the sector recover.

As the broader market grapples with rising interest rates and inflation, innovation – the lifeblood of the industry – continues to take place, and this trend is expected to continue in 2023. Mergers and acquisitions in the pharmaceutical and biotechnology sector are also expected to accelerate significantly.

This is a defensive sector to invest in in the current environment of rising interest rates and economic uncertainty.

Several companies in the pharmaceutical and biotechnology sector have so far generated a return of 40% or more in 2022 and have room for further growth in 2023. Here we discuss four of these companies, Merck MRKVertex Pharmaceuticals VRTXImmunocore Holdings IMCR, and Immunovant IMVT.

Merck

Headquartered in Kenilworth, New Jersey, Merck has more than six blockbuster drugs in its portfolio, including the PD-L1 inhibitor, Keytruda, approved for several types of cancer and alone accounting for approximately 40% of the company’s pharmaceutical sales. Company. Ongoing recovery from pandemic-related disruptions and strong underlying global demand across its businesses, particularly for Keytruda and Gardasil vaccines to prevent HPV-related cancers, are driving Merck’s business performance .

Keytruda is experiencing continued growth and expanding into new indications and markets globally. With continued label expansion into new indications and early-stage settings, Keytruda is expected to remain a leading key driver. Merck’s Animal Health business contributed significantly to its revenue growth, with the company growing above the market. This trend is expected to continue in 2023. Merck has a strong cancer product portfolio, including Keytruda, which is expected to help drive long-term growth.

Merck shares are up 43.0% this year so far. The Zacks Consensus Estimate for 2022 rose from $7.31 per share to $7.38 per share, while the 2023 estimate rose from $7.21 per share to $7.34 per share over the 60 last days. Merck has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Vertex Pharmaceuticals

Vertex’s main focus area is cystic fibrosis (CF). With its four cystic fibrosis drugs, Vertex treats the majority of the 83,000 cystic fibrosis patients in the United States, Europe, Canada and Australia. Sales of Vertex CF continue to grow, driven by its Trikafta/Kaftrio triple therapy. New reimbursement agreements in non-US markets and label expansion to younger age groups in the US are boosting sales of Trikafta/Kaftrio. Vertex faces minimal competition in its core CF franchise.

While Vertex’s primary focus is developing and strengthening its CF franchise, the company also has a rapidly developing portfolio of mid- to late-stage products in seven other diseases such as acute pain, sickle cell disease , beta thalassemia, APOL1-mediated kidney disease, alpha-1 antitrypsin deficiency, and cell therapy for type I diabetes. Many of these candidates represent multibillion-dollar opportunities. Programs in five disease areas are now entering or progressing toward advanced clinical development. Several late-stage projects have established proof of concept. Several data readings are planned for 2023 and can be important catalysts for the stock.

Vertex Pharmaceuticals stock is up 40.4% this year so far. Vertex’s 2022 earnings estimates have risen from $14.21 to $14.65 per share, while those for 2023 have risen from $15.10 to $15.62 per share over the past 60 days. Vertex has a Zacks Rank of 3.

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Securities in Immunocore’s portfolio

Immunocore developed the world’s first soluble TCR therapy, KIMMTRAK, which was approved for the treatment of unresectable or metastatic uveal melanoma, a rare and aggressive form of melanoma that affects the eye, in several countries, including the United States -United. KIMMTRAK has seen strong adoption in academic and community treatment centers. Immunocore, also at a recent medical meeting, announced promising clinical data on its first PRAME antigen-targeting molecule, IMC-F106C-101.

In July, Immunicore announced a private investment in public financing (“PIPE”) from four existing investors for net proceeds of $139.6 million. This PIPE financing, along with KIMMTRAK’s strong commercial performance, strengthens the company’s growth prospects.

Immunocore’s stock is up 73.5% this year so far. Loss estimates for 2022 narrowed from $1.25 to 54 cents per share, while those for 2023 improved from $1.69 to 70 cents per share over the past 60 days. Immunocare has a Zacks Rank of 2.

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Immunovant

Immunovant is progressing well in the development of its lead drug candidate, batoclimab (formerly IMVT-1401), for the treatment of several types of autoimmune diseases. Immunovant is developing batoclimab, initially focusing on the treatment of myasthenia gravis, thyroid eye disease and warm autoimmune hemolytic anemia.

The Company believes that, if approved, the candidate will become a cornerstone therapy for the treatment of many autoantibody-driven diseases and would be a unique treatment, different from those currently available that are more invasive for autoimmune diseases. advances mediated by immunoglobulin G.

Immunovant’s stock is up 78.5% this year so far. Loss estimates for 2022 narrowed from $1.64 to $1.56 per share, while those for 2023 improved from $1.83 to $1.60 per share over the last 60 years. last days. Immunovant also has a Zacks Rank #3.

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