It's exciting to add new stocks to your portfolio or adjust positions. But it's also nice to own a handful of stocks that you can buy and hold on to for a long time -- like a decade or longer. You know that you can count on them for leadership in their market and earnings growth. Eventually, that should translate into share price growth too.
The healthcare sector offers many choices across the businesses of biotech, pharma, and medical devices. Here, I'll focus on three companies that stand out for their strong market positions: a biotech company and a medical device company that each dominate their fields, and a pharmaceutical player on the way to winning in market share. Let's take a look at each.
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1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX 0.20%) is the worldwide leader in cystic fibrosis (CF) treatment. The company makes four CF drugs. But the most recently approved -- Trikafta -- is its star product. Trikafta generated more than $1.7 billion in revenue in the most recent quarter. That's 84% of total product revenue. Trikafta has the ability to treat 90% of all CF patients, but Vertex isn't stopping there. The company has partnered with Moderna to develop a treatment for the remaining 10% of CF patients. The companies aim to launch clinical trials by the end of the year.
The biotech company is also moving closer to expanding its commercialized products beyond CF. It has programs in the pipeline for a variety of indications, including blood disorders, pain, and type 1 diabetes. The closest-to-market candidate is a gene-editing one-time curative treatment for blood disorders sickle cell disease and beta thalassemia. Vertex and partner CRISPR Therapeutics plan on filing for regulatory approval by the end of this year. Considering Vertex's CF and non-CF programs, the company could generate billions of dollars in annual revenue well into the future.
Vertex is trading at about 27 times trailing-12-month earnings. That's compared to more than 54 back in 2020. At the same time, revenue and net income have moved considerably higher.
2. Intuitive Surgical
Intuitive Surgical (ISRG -1.69%) is the biggest player in the robotic surgery market. The company's share totals more than 79%, according to BIS Research. Intuitive's flagship product is the da Vinci surgical robot. It's used for various types of minimally invasive surgery -- for example, hernia repair. Intuitive has installed more than 6,900 da Vinci systems worldwide. Intuitive generates revenue from selling the systems -- but even more revenue from selling the disposable instruments and accessories needed for da Vinci procedures.
Now here's why I'm not too concerned about rivals taking major market share away from Intuitive. First, the da Vinci system represents quite an investment. The systems go for about $2 million. Once hospitals spend that much, they may want to keep the system for a long time. And most surgeons have been trained on the da Vinci -- so they might want to stick with it too.
All of this means you can count on Intuitive generating major revenue today and over time. Intuitive shares look cheap right now considering the company's growth potential. They're trading at 48 times trailing-12-month earnings. That's down from more than 70 back in January.
3. AbbVie
The bad news for pharmaceutical company AbbVie (ABBV 1.06%) is that revenue from its blockbuster immunology drug Humira is on the decline. Biosimilar competition is taking market share in Europe -- and biosimilars are set to hit the U.S. market next year. But here's the good news: AbbVie has other drugs that may compensate. AbbVie has said it expects combined peak sales of two other immunology treatments -- Skyrizi and Rinvoq -- to top Humira's peak revenue. Both drugs eventually could be used across Humira's indications.
In the first quarter, Skyrizi sales jumped more than 63% and sales of Rinvoq climbed more than 53%. AbbVie's aesthetics portfolio is also adding to growth. The company sells the popular anti-wrinkle product Botox and injectable gel filler Juvederm. Aesthetics revenue in the first quarter advanced more than 20% to top $1.3 billion.
Importantly, even with the decline in Humira revenue, AbbVie has the potential to keep growing in a major way. It's expected to become the No. 1 pharmaceutical company worldwide by prescription drug market share in 2026, according to Statista.
AbbVie has already delivered performance to investors. It's gained more than 80% over the past three years. But considering the growth ahead, there's likely more share performance to come. And that's why it's a good idea to buy this pharmaceutical stock now and hold on for the next decade.
