Vertex Pharmaceuticals (VRTX) has recently emerged as one of the healthcare sector’s stellar performers, with a remarkable focus on cystic fibrosis (CF) treatment. This article delves into the impressive journey of Vertex Pharmaceuticals and examines the return on investment for those who put their faith in the company back in 2018.
A Stock on the Rise
At the close of 2018, Vertex’s stock was priced at $165.71. If you had invested $10,000 in the company, you would now be sitting on an investment worth approximately $26,200 – a striking 160% return on your initial investment. In contrast, a similar investment in the S&P 500 would have yielded a 108% return over the same period. Vertex Pharmaceuticals has outperformed the broader market.
The Driving Force Behind Success
Trikafta, known as Kaftrio in Europe, is the driving force behind Vertex’s exponential growth. In October 2019, the Food and Drug Administration (FDA) approved Trikafta, opening doors to treatment for 90% of CF patients by targeting the most common mutation. Trikafta’s impact on Vertex’s financials has been nothing short of groundbreaking. In the first nine months of 2023 alone, Trikafta/Kaftrio generated over $6.6 billion in revenue, more than double the $3 billion in sales of all Vertex’s CF products in 2018.
Diversification and Future Prospects
Questions have arisen about Vertex’s dependence on CF treatment and whether it is diversified enough. However, recent developments indicate a broader scope. In December, regulators approved Casgevy, a gene therapy developed by Vertex in partnership with CRISPR Therapeutics, for treating sickle cell disease. Furthermore, this month, it was approved for transfusion-dependent beta-thalassemia. Vertex will share a 60% cut of the profits with CRISPR. The company also boasts late-stage trials for Inaxaplin, a treatment for APOL1-mediated kidney disease, and VX-548, a non-opioid pain medication.
A Promising Future in Healthcare
Vertex Pharmaceuticals, worth approximately $110 billion today, has been a hot healthcare stock over the past five years. Despite its remarkable growth, the stock’s valuation at 27 times its estimated future earnings may not be excessive. With impressive profit margins, a solid CF franchise, recent gene therapy approvals, and a promising pipeline, Vertex remains an appealing choice for investors seeking growth stocks.
Vertex Pharmaceuticals has established itself as a thriving healthcare investment, outperforming the market and showcasing impressive financial growth. With its continued dedication to innovation and diversification, the company seems poised for a bright and prosperous future in the healthcare sector.
