Sarah Travers
Vertex Pharmaceuticals (VRTX) has emerged as a standout performer in the healthcare industry, primarily driven by its unwavering commitment to cystic fibrosis (CF) treatment. This article explores the remarkable journey of Vertex Pharmaceuticals and evaluates the returns that early investors have enjoyed since 2018.
A Rising Star in the Stock Market
As of the end of 2018, Vertex’s stock was trading at $165.71 per share. If you had invested $10,000 in the company at that time, your investment would now be valued at around $26,200 – delivering an impressive return of 160% on your initial capital. In comparison, a similar investment in the S&P 500 would have yielded a 108% return during the same period. Clearly, Vertex Pharmaceuticals has outshone the broader market.
The Catalyst Behind Their Success
The catalyst for Vertex’s phenomenal growth lies in Trikafta, known as Kaftrio in Europe. In October 2019, the Food and Drug Administration (FDA) granted approval for Trikafta, ushering in a new era of treatment for 90% of CF patients by targeting the most common mutation. The financial impact of Trikafta on Vertex has been nothing short of groundbreaking. In just the first nine months of 2023, Trikafta/Kaftrio generated over $6.6 billion in revenue, more than doubling the $3 billion in sales of all Vertex’s CF products in 2018.
Diversification and Future Growth Prospects
Concerns have arisen regarding Vertex’s reliance on CF treatment and its need for diversification. Recent developments, however, suggest a broader horizon. In December, regulatory authorities granted approval for Casgevy, a gene therapy developed by Vertex in collaboration with CRISPR Therapeutics, for treating sickle cell disease. Moreover, this month, it received approval for transfusion-dependent beta thalassemia. Vertex will share 60% of the profits with CRISPR. Additionally, the company is conducting late-stage trials for Inaxaplin, a treatment for APOL1-mediated kidney disease, and VX-548, a non-opioid pain medication.
A Bright Future in the Healthcare Sector
Currently valued at approximately $110 billion, Vertex Pharmaceuticals has been a hot commodity in the healthcare stock market for the past five years. Despite its impressive growth, the stock’s valuation at 27 times its estimated future earnings appears reasonable. With robust profit margins, a strong CF product portfolio, recent gene therapy approvals, and a promising pipeline, Vertex continues to be an attractive choice for investors seeking growth-oriented stocks.
Vertex Pharmaceuticals has firmly established itself as a thriving investment opportunity in the healthcare sector, consistently outperforming the market and showcasing remarkable financial growth. With a continued commitment to innovation and diversification, the company is well-positioned for a prosperous future in the ever-evolving healthcare industry.
