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Update-1 11/15 Merck buys Cedara for $9.2B for long acting Flu drug. An alternative to vaccines? CDTX up 105%

IBB at $164.30 approaching highs of AUG 2021 of $177.

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Large Cap Biopharma Stocks Lead the Way for Healthcare Investors 

• Biopharma stocks offer growth plus value with dividends. Standouts are ABBV, GILD, and LLY. Comeback candidates for 2026: REGN and VRTX.
• Risk remains from tariffs and pushback from Trump Administration policies on drug pricing but with outstanding results from Eli Lilly we are more optimistic.
• Innovation is still key to growth and cost effective drugs: Lilly with GLP-1, immunology, genomics, personalized and targeted therapies with paired Diagnostics for oncology.

This week we reviewed all sectors of health science and technology and there are breakthroughs coming  beyond pharmaceuticals for weight loss/obesity and diabetes. For example innovation from Precision Oncology, Among the developments in health sciences are: bi-specific antibodies, genomics, new DNA/RNA sequencing tools and MRD testing in Oncology, growing markets and hyper growth in Immunology, implementation of AI tools in molecular diagnostics and patient data. Moreover all these technologies come together in a paradigm of personalized cancer treatment and targeted therapy.

We have been positive on large cap biopharma all year despite the volatility from tariffs and tough political talk from the Administration, markets and companies have adjusted to Trump talk on tariffs and making products  But Eli Lilly and Company has been exceptional.

We would also expect a pick-up in partnering as these financially strong companies seek new technologies and products through licensing and M&A.

Here are several takeaways of the biopharmaceutical sector performance YTD:

1. Our top picks Abbvie (ABBV) and Gilead Sciences (GILD) have returns greater than 30% YTD!
2.  Eli Lilly (LLY) performance has been exceptional as the stock is up 33% YTD and 25.6% MTD. The market for GLP-1 drugs is expected to grow exponentially expanding access to obesity medicines with the a new government deal for lower prices for MEDICARE.  The Company has addressed many issues from the Administration by committing to new R&D and manufacturing.
3. Our new pick last month Regeneron (REGN) is up 28% MTD.
4. Pfizer brings  a 6%+ yield and has been very aggressive in dealmaking for new technology for new markets.
5. Vertex is a laggard but has dominant market share for treatment of Cystic Fibrosis and non-opioid pain killers. VRTX also has a promising Phase 2/3 pipeline for kidney diseases and pain peripheral neuropathy).
6. IBB performance reflects these trends with a 23% move YTD. and 8.6% MTD. LONG: ABBV, LLY, GILD, PFE, REGN, VRTX also NVS and RHHBY

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