Pharma Stocks' Surging Performance: Is it Sustainable?

Pharmaceutical stocks have been on an upward trend in recent months, but is this performance sustainable?

In the past year, the sector has risen by over 66%, with two companies driving this growth: Johnson & Johnson and Eli Lilly.

J&J's oncology therapies have been a major contributor to its success, with seven approved treatments and 23 in Phase 3 trials. The company also made a strategic spin-off of its consumer products division in 2023.

Lilly has more than tripled since the start of 2023, with its GLP-1 weight-loss drugs being a major driver of growth. These medicines have combined revenues of $36 billion and may have other uses beyond treating Type 2 diabetes.

Investors can gain exposure to these companies through an ETF such as iShares U.S. Pharmaceuticals or a managed mutual fund like Fidelity Select Pharmaceuticals.