Vertex Pharmaceuticals (VRTX) stands as a shining star in the healthcare sector, primarily owing to its remarkable strides in cystic fibrosis (CF) treatment. This article explores the impressive journey of Vertex Pharmaceuticals and analyzes the returns for those who invested in the company in 2018.
A Rising Stock
In late 2018, Vertex’s stock was valued at $165.71. A $10,000 investment in the company at that time would now be worth approximately $26,200, representing an impressive 160% return on the initial investment.
In comparison, a similar investment in the S&P 500 would have yielded a 108% return over the same period. Clearly, Vertex Pharmaceuticals has outperformed the broader market.
The Driving Factor Behind Success
Vertex’s exponential growth can be attributed to Trikafta, also known as Kaftrio in Europe. In October 2019, the Food and Drug Administration (FDA) granted approval for Trikafta, offering treatment to 90% of CF patients by targeting the most common mutation. Trikafta’s impact on Vertex’s financials has been revolutionary. 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 regarding Vertex’s reliance on CF treatment and its diversification efforts. However, recent developments indicate a broader scope. In December, regulatory bodies approved Casgevy, a gene therapy developed by Vertex in partnership with CRISPR Therapeutics, for treating sickle cell disease.
Furthermore, this month, it received approval for transfusion-dependent beta thalassemia. Vertex will share a 60% share 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, currently valued at approximately $110 billion, has been a standout 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 considered excessive. With impressive profit margins, a robust CF franchise, recent gene therapy approvals, and a promising pipeline, Vertex remains an attractive option for investors seeking growth stocks.
Vertex Pharmaceuticals has firmly established itself as a robust healthcare investment, consistently outperforming the market and demonstrating substantial financial growth. With an unwavering commitment to innovation and diversification, the company appears poised for a prosperous future in the healthcare sector.
