Will the current decade someday be known as "the second Roaring 20s," similar to the nickname given to the period 100 years ago? Maybe. The overall stock market has performed well since 2020, despite the COVID-19 pandemic.
There have certainly been some huge winners in specific areas, including the biopharmaceutical industry. Here's the best big pharma stock of the decade, so far (and it's not even close).
Relatively few big winners
The S&P 500 is up more than 30% since Jan. 1, 2020. However, relatively few big pharma stocks have topped that performance. Quite a few stocks in the group are even in negative territory.
As things stand now, only six big pharma stocks are beating the S&P 500. And that number includes some that are typically categorized as biotech stocks, rather than pharma stocks. (The difference between the two is somewhat murky.)
Three pharma stocks stand out as the biggest winners of the decade, so far. Shares of Regeneron Pharmaceuticals (REGN +0.35%) have more than doubled. Much of that impressive gain came during the early days of the COVID-19 pandemic as Regeneron's antibody therapies enjoyed tremendous demand.
NASDAQ: REGN
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Novo Nordisk (NVO 0.95%) ranks as the No. 2 big pharma stock of the 2020s, at this point. The stock has soared more than 200%, thanks in large part to the massive commercial success of semaglutide.
The drug is marketed under the Ozempic brand name as a treatment for type 2 diabetes and under the Wegovy brand name as a treatment for weight loss. However, Ozempic has been prescribed frequently as an off-label treatment for weight loss, as well.
NYSE: NVO
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The clear leader
While Regeneron and Novo Nordisk have performed well this decade, there's another big pharma stock that's the clear leader. Shares of Eli Lilly and Company (LLY +2.04%) have skyrocketed close to 300% over the last nearly four years. Lilly now stands as the biggest pharmaceutical company based on market cap -- and the biggest healthcare company, too.
NYSE: LLY
Key Data Points
This best big pharma stock of the decade combines elements of the No. 2 and No. 3 stocks. Like Regeneron, Lilly achieved success with its COVID-19 antibody therapies. Like Novo Nordisk, Lilly has made billions of dollars in treating diabetes.
Lilly's diabetes franchise includes blockbuster drugs Trulicity and Jardiance, plus insulin injection Humalog. The company's fastest-rising star, though, is Mounjaro. Like Ozempic, Mounjaro is used to treat type 2 diabetes. Lilly also hopes to win regulatory approval for the drug for weight loss later this year.
But Eli Lilly's fortunes don't hinge solely on its diabetes products. The company is a major player in the oncology market with cancer drugs Verzenio, Cyramza, Retevmo, and Tyvyt. It also markets leading autoimmune disease therapies Taltz and Olumiant and migraine drug Emgality.
Is Lilly still a smart pick?
You might think that Lilly's high-flying days could be coming to an end after looking at its valuation. The big pharma stock trades at a forward earnings multiple of more than 41x. On average, pharma stocks in the S&P 500 trade at around 16x expected earnings.
But this valuation metric doesn't tell the full story about Lilly's growth prospects. Mounjaro seems likely to become the best-selling drug in the world. Some analysts project that it could rake in peak annual sales of more than $50 billion.
Lilly also expects to win U.S. regulatory approval for donanemab in treating Alzheimer's disease by year-end. The drug showed promise in a late-stage clinical study in slowing cognitive and functional decline in patients with early-stage Alzheimer's disease. If approved, donanemab should be a slam-dunk future blockbuster.
I don't look for Lilly's share price to triple by the end of the decade as it has done so far in the 2020s. However, with the growth potential for Mounjaro, donanemab, and other drugs in Lilly's lineup and pipeline, I think the stock is still a smart pick for long-term investors.
