4 Biotech Stocks That Show Promise On Sustainable Growth

Within the Medical sector, biotech stocks have performed well in the first half of the year, despite challenges like rising competition, pipeline setbacks, slowdown in growth of mature products and generic competition for certain key drugs. The sector recovered from the pricing controversy of 2016 and defined uncertainties surrounding President Trump’s proposed healthcare policy.

Some of the factors that are responsible for the biotech sector performing well in the current year so far are an increase in FDA approvals, new product sales ramp up, R&D success and innovation, strong clinical study results and continued strong performance of legacy products.

A few other events also contributed to the rally in the sector in the past month. These include pharmaceutical giant, Gilead Sciences (GILD - Free Report) decision to acquire immunotherapy focused company, Kite Pharma (KITE - Free Report).

The FDA’s approval of Novartis AG’s NVS gene transfer treatment, Kymriah (tisagenlecleucel) suspension for the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse was another good news for the sector. Kymriah, formerly CTL019, is the first chimeric antigen receptor T cell (CAR-T) therapy to be approved.

Further, two companies -- Alexion Pharmaceuticals, Inc. (ALXN - Free Report) and Eli Lilly and Company (LLY - Free Report) -- announced restructuring initiatives including job cuts recently. While the former will reduce its global workforce by about 20%, Lilly will do the same by about 8%. Both the companies plan to invest the cost savings in new drugs/line extensions which in turn bodes well for growth of the sector as well.

Industry and Rank Performance

The broader Drugs market is up 11.9% year to date, outpacing the 11.8% gain for the S&P 500.

Two of the four Zacks industries — Medical-Biomed and Genetics (16% versus 11.8%) and Large-Cap Pharma (16% versus 11.8%) have outperformed the S&P 500 Index.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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