Many investors have flocked to big pharma stocks throughout the years. And doing so has paid off handsomely with several of those stocks.
AbbVie (ABBV 0.88%) and Eli Lilly (LLY +0.70%) stand out as two of the biggest pharma stocks around. Both have generated solid returns for investors. But which stock is more likely to help you retire as a millionaire?
The case for Eli Lilly
There's a strong case to be made that Eli Lilly is the better pick over AbbVie for long-term investors. Lilly ranks among the biggest healthcare winners of 2023, and its growth prospects continue to look bright.
NYSE: LLY
Key Data Points
Mounjaro has become a juggernaut for Lilly in type 2 diabetes. The same underlying drug, tirzepatide, was also recently approved by the U.S. Food and Drug Administration (FDA) for weight loss, with Lilly using the brand name Zepbound.
Some analysts project that Mounjaro and Zepbound could achieve peak annual sales of more than $50 billion. To put that figure into context, Lilly expects to generate total sales in 2023 of between $33.4 billion and $33.9 billion.
The company could have another huge blockbuster drug on the way, as well. Lilly expects an FDA approval decision on donanemab in treating Alzheimer's disease in the first quarter of 2024. Morningstar predicts the drug could reach peak annual sales of $7 billion.
Lilly's current lineup also includes six other products with solid sales growth, with cancer drug Verzenio especially standing out after its sales skyrocketed 68% year over year in the third quarter. In addition, the company's pipeline features 22 late-stage programs and 45 programs in earlier testing.
AbbVie's advantage
AbbVie simply can't compete with Lilly's growth story. The company's revenue and earnings are declining due to biosimilar competition for its top-selling drug, Humira. The big pharma stock's performance in 2023 reflects this reality.
NYSE: ABBV
Key Data Points
However, AbbVie does have at least one key advantage over Lilly: It offers one of the most attractive dividends around. AbbVie's dividend yield currently stands at nearly 4.3%. The company has increased its dividend for 52 consecutive years, putting it in the elite group of stocks known as Dividend Kings.
Don't underestimate the importance of dividends in growing your retirement account. Since its spinoff from Abbott in 2013, AbbVie's share price has increased by a little over 310%. But if we include dividends, the stock's total return during the period is a much higher 547%.
Also, AbbVie's current challenges should only be temporary. The company expects to return to rapid growth by 2025. Its key growth drivers include Rinvoq and Skyrizi, autoimmune disease drugs that should together top the peak annual sales generated by Humira.
AbbVie's pipeline holds a lot of potential, too. The company has over 90 programs in clinical development, 23 of which are in late-stage testing. Blood cancer drug epcoritamab looks especially promising, with Wall Street analysts projecting peak annual sales of close to $3 billion.
Better pick for a million-dollar retirement
So which of these two stocks is the better pick to help you retire as a millionaire? Let me first mention a few caveats.
Investors are usually better off building a diversified portfolio instead of betting the farm on a small number of stocks. Putting an inordinately large percentage of your retirement savings in one stock can be highly risky.
There's also no guarantee that you'll be able to build your retirement account to $1 million or more. Your likelihood of success depends heavily on how much you have to invest and your time horizon. The more money to invest and the longer you wait, the better your chances will be.
That said, I think that both AbbVie and Eli Lilly are good picks for long-term investors. However, if I had to choose only one of them right now as the most likely to be a millionaire-maker, it would be Lilly. The company's growth opportunities are just too good for AbbVie to match.
Things could change over time, though. AbbVie could launch huge winners in the future. Lilly could stumble. My pick is Lilly, but I wouldn't rule out a "tortoise-and-the-hare" scenario where AbbVie ultimately delivers the greatest total return.
