1 Major Factor Behind the Healthcare Sector's Recent Surge
Key Points
Eli Lilly's GLP-1 drug became the world's best-selling drug in Q3.
Merck, Johnson & Johnson, AbbVie, and other companies are soaring on new drugs or the growth of existing ones.
The healthcare sector has vastly outperformed the broader market in recent weeks. The S&P 500 Health Care Sector index is up around 5.1% over the past month, while the broader S&P 500 index has climbed just about 2.3%.
The primary factor behind this outperformance is blockbuster drugs. The best-performing healthcare stocks in the sector are drug manufacturers, and they've been on fire of late.
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Eli Lilly (NYSE: LLY) had a huge third quarter, and its GLP-1 medication -- tirzepatide, which treats both type 2 diabetes and obesity -- became the best-selling drug on the planet during the quarter. Lilly, the largest company in the sector by market cap, is up 9.1% over the past month.
Johnson & Johnson (NYSE: JNJ) announced on Nov. 17 that it will acquire Halda Therapeutics, a clinical-stage biotechnology company. Halda has a proprietary platform to develop oral, targeted therapies for multiple types of solid tumors, particularly prostate cancer. J&J's stock is up 8.6% over the past month.
AbbVie (NYSE: ABBV) is another hot pharma stock. Sales of its Skyrizi, an immunology drug that treats conditions like psoriasis and arthritis, rose a whopping 46.8% to $4.7 billion during the third quarter. Sales of Rinvoq, a similar immunology drug, climbed 35.3% to nearly $2.2 billion. Management said it believes Rinvoq will hit $11 billion in annual revenue by 2027, and Skyrizi will reach the $20 billion mark. The stock has climbed 4.3% in a month.
And drug giant Merck (NYSE: MRK) is up a whopping 18.2% over the past month. Quarterly sales of Keytruda, its blockbuster cancer drug, rose 10% from the same period a year ago and topped $8 billion for the first time.
Those are a few of the major blockbuster drugs sending healthcare stocks higher, but there are many more.
Matthew Benjamin has positions in Select Sector SPDR Trust-State Street Health Care Select Sector SPDR ETF. The Motley Fool has positions in and recommends AbbVie and Merck. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.