Vertex Pharmaceuticals (VRTX -0.50%) and AbbVie (ABBV -0.01%) both beat last year's bear market. In fact, in 2022 these dynamic biotech stocks climbed by percentages in the double digits, and for good reason. People need medicines no matter what the market is doing -- and this helps healthcare companies maintain earnings during good times and bad, making them solid investments in tough economies.
Vertex and AbbVie also happen to offer a lot of growth potential. Vertex has a new potential blockbuster drug on the horizon. And AbbVie may become the leader in prescription-drug market share within the next few years.
Which of these superstar stocks is the better growth pick right now? Let's find out.
The case for Vertex Pharmaceuticals
Vertex is known for its specialty of cystic fibrosis (CF) treatment. The company sells four CF drugs, including blockbuster Trikafta. As the company's newest CF drug, it brought in more than $7.6 billion in revenue last year. The company is the global CF leader and could keep that position at least through the late 2030s. In fact, the future drug that may unseat Trikafta is another CF candidate that Vertex is testing in phase 3 right now.
But investors wanted more: They wanted Vertex to show it could be successful beyond CF. The company is about to do just that. Vertex has submitted exa-cel, its treatment for the blood disorders beta thalassemia and sickle cell disease, to regulators in the U.S., Europe, and the U.K. Exa-cel could become a blockbuster -- and a regulatory decision may be right around the corner.
Vertex's pipeline includes other interesting candidates that may solidify its expansion into other treatment areas -- and potentially bring in significant revenue. An example is VX-548, a non-opioid candidate to treat pain. There's huge market opportunity to treat this common problem. That's because today, our choices are limited to a few over-the-counter options -- or prescription opioids that have been linked to addiction.
Vertex is studying VX-548 in phase 3 trials, so if all goes well, this represents another big revenue opportunity within the next few years. All of this means Vertex's revenue growth -- in CF and beyond -- is far from over.
The case for AbbVie
AbbVie has reached an important turning point. The bad news is that its megablockbuster immunology drug Humira has lost exclusivity, so the company says that the drug is facing a 37% drop in U.S. revenue this year.
But here's the good news. AbbVie's prepping two newer immunology drugs, Rinvoq and Skyrizi, to boost its portfolio. And together, it seems they'll even top Humira's peak annual revenue of more than $20 billion. Both drugs already are blockbusters. AbbVie predicts that together they'll bring in more than $17.5 billion in 2025, and more than $21 billion in 2027.
So while this year probably won't be a big one of growth for AbbVie, that should quickly change as Rinvoq and Skyrizi gain regulatory approvals for additional indications. At the moment, Rinvoq is approved for five indications and Skyrizi three.
AbbVie also has impressive neuroscience and aesthetics portfolios. Vraylar is used to treat major depressive disorder and bipolar disorder, and in the most recent quarter, its revenue climbed by over 15%. Botox for migraines saw its revenue advance more than 8%, and Botox as a wrinkle treatment also posted gains. AbbVie is expected to hold the biggest share of the prescription drug market by 2026, according to Evaluate Pharma.
Investors also can count on AbbVie for dividend payments and growth. The company has increased its payment year after year. And today, AbbVie pays an annual dividend of $5.92 per share. The current yield of 3.76% beats the average paid by the pharma industry.
All of this means that AbbVie offers solid long-term earnings growth prospects -- and passive income while you wait.
Vertex or AbbVie?
Both of these stocks make great long-term investments. They have a track record of earnings growth, and products and candidates that are set to deliver growth over time. Their valuations have increased, but they both remain at reasonable levels considering their prospects:
VRTX PE Ratio (Forward) data by YCharts.
But if I had to choose just one to invest in today, I'd go for Vertex. That's because growth could come sooner for this biotech stock: Regulators are reviewing exa-cel now, so a decision isn't far away. Meanwhile, AbbVie faces declines in Humira revenue this year -- and that could weigh on the stock.
AbbVie may take a bit of time to enter its new phase of growth. Vertex, though, could transition to its next phase of growth more quickly. So if you buy Vertex now, you may benefit in the near term...and over the long term, too.
