The Zacks Analyst Blog Eli Lilly, J&J, AbbVie, AstraZeneca and Pfizer

Industry Overview - The drug and biotech industry faced challenges in the past months due to disappointing Q3 sales, guidance cuts, and pipeline setbacks, but is expected to recover in 2025 [2] - Innovation in areas like rare diseases, oncology, obesity, immunology, and neuroscience is driving investor interest, with R&D remaining a key focus in 2025 [3] - The Zacks Large Cap Pharmaceuticals industry includes global companies developing drugs for therapeutic areas like neuroscience, cardiovascular, rare diseases, immunology, and oncology, with some also involved in vaccines, animal health, and medical devices [5] - Large drugmakers invest heavily in product pipelines and line extensions, with continuous innovation and M&A activity being defining characteristics [6] Key Drivers and Challenges - Innovation and pipeline success are critical for top-line growth, with pharma companies spending a significant portion of revenues on R&D [7] - Aggressive M&A activity is a key feature, with large companies acquiring smaller biotech firms to build pipelines, particularly in oncology, rare diseases, and cell and gene therapy [8][9] - Recent major M&A deals include Eli Lilly's buyout of Morphic, Vertex's acquisition of Alpine Immune Sciences, and Novo Nordisk's purchase of Catalent [10] - Pipeline setbacks, regulatory delays, pricing pressure, generic competition, and macroeconomic uncertainty are significant headwinds for the industry [11][12] Industry Performance and Valuation - The Zacks Large Cap Pharmaceuticals industry has a Zacks Industry Rank of 146, placing it in the bottom 41% of Zacks industries [14] - The industry has outperformed the Zacks Medical Sector but underperformed the S&P 500, with a 1.2% decline over the past year compared to the S&P 500's 26.2% rise [15] - The industry's forward 12-month P/E ratio is 18.64X, lower than the S&P 500's 25.08X and the Zacks Medical Sector's 25.47X [16] Key Companies to Watch - J&J: Diversified business model with strong growth in the Innovative Medicines segment, expected to exceed $57 billion in sales in 2025 [17][18] - **Pfizer**: Strengthened oncology position with Seagen acquisition, expects operational growth driven by new products and cost cuts of at least$5.5 billion [21][22][23] - AbbVie: Successfully navigating Humira's loss of exclusivity with new immunology drugs Skyrizi and Rinvoq, expects mid-single-digit revenue growth in 2025 [24][25][26] - Eli Lilly: Strong performance from tirzepatide medicines Mounjaro and Zepbound, with demand expected to drive revenue growth in 2025 [28][29][30][31] - AstraZeneca: Diversified portfolio with 12 blockbuster drugs, expects industry-leading top-line growth and $80 billion in revenues by 2030 [33][34][35]