We recently published a list of 10 Best Pharma Stocks to Buy for Long Term Growth. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against other best pharma stocks to buy for long term growth.

U.S. Pharma Turns to China for Drug Deals

With big American pharmaceutical corporations always searching for medications in China, the US pharmaceutical industry is going through a unique trend never seen before. About 30% of Big Pharma acquisitions involving at least $50 million upfront in 2024 involved Chinese corporations, according to DealForma statistics, as reported by CNBC. This was an increase from 20% the previous year and nearly 0% just five years before.

Experts cite several causes for this tendency. Some people think that Chinese pharmaceutical firms are drawing notice due to their sophisticated development skills, which enable them to produce potent compounds in large quantities. In addition to being able to start testing on human subjects more quickly, these Chinese companies can charge a lower price for these medications than the US. Buyers have developed a business strategy that enables them to import medicines through licensing agreements, according to CNBC. The dearth of venture capital in China is additional pressure on biotech companies to enter these agreements.

Experts think this situation is here to stay, even though there are several possible causes for this tendency. Although the US pharmaceutical industry is expected to be impacted, it is uncertain how these effects would manifest. If big pharmaceutical companies find a good Chinese drug at a low price, some experts think it may destroy American startups; others think the competition would benefit the sector. Tim Opler, a managing director in Stifel’s global healthcare group, stated the following regarding the circumstances:

“It’s kind of a watershed moment where the pharma industry is like, ‘We don’t really need to buy U.S. biotechs necessarily. We will if it makes sense, but we can buy perfectly good biotech assets through licensing deals with Chinese companies.”

Emily Field, Head of European Pharma Research at Barclays, spoke to CNBC on February 20 about the performance of obesity medications, the effects of US tariffs, and the dynamics of the pharmaceutical industry. According to her, at least in the first half of this year, the industry might not perform poorly. The effectiveness of obesity medications is still up for debate, though, as leading companies in the field have shown inconsistent results in the past.

Speaking about the tariffs, she stated that since some businesses assemble their products in the US after producing them overseas, their implementation raises several unanswered questions for the pharmaceutical industry. These businesses, therefore, have relatively low manufacturing costs, which is an important factor to take into account when assessing the effects of tariffs. She thought that these businesses could easily absorb the higher expense of the tariffs. The topic hasn’t come up much on earnings calls this quarter, and the market is nearing the end of the reporting season.

Our Methodology

For this article, we screened for companies that operate in the pharmaceutical industry. From that list, we identified stocks that have achieved positive revenue growth over the past five years. Then, we picked companies with a 5-year revenue growth of 10% and ranked the top 10 based on hedge fund sentiment as of Q4 2024, as per Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Eli Lilly and Company (NYSE:LLY)

Number of Hedge Fund Holders: 115 

Eli Lilly and Company (NYSE:LLY) tops our list for being one of the best pharmaceutical stocks. It develops, manufactures, discovers, and sells pharmaceutical products. These goods cover immunology, neurology, diabetes, oncology, and other treatments. Due to the company’s robust financials and its in-demand GLP-1 medications, which are still in the early stages of development and are used to treat diabetes and obesity, investors are optimistic about the company.

Eli Lilly and Company (NYSE:LLY) operates well, and in fiscal 2024, it announced a revenue increase of 32% on a YoY basis, surpassing its initial projection by $4 billion. In fiscal Q4 2024, the corporation achieved significant strides in all of its strategic deliverables. The company’s Mounjaro and Zepbound medications saw great acceptance, which helped revenue climb by 45% during the quarter.

The company formed a partnership with AdvanCell on February 10 to use targeted alpha treatments to improve cancer treatment. The partnership intends to accelerate clinical development for novel radiopharmaceuticals by fusing AdvanCell’s Pb-212 production technology and infrastructure with Eli Lilly and Company (NYSE:LLY)’s experience in medication manufacture. The corporation is anticipated to have a great chance to investigate Pb-212-based treatments and expand its line of cancer treatments.

Tim Anderson of Bank of America Securities maintained a Buy rating on Eli Lilly and Company (NYSE:LLY) in a report published on April 9. A 37.73% increase from current levels is implied by its consensus price objective of $736.93. LLY received special attention in the Q4 2024 investor letter from Aristotle Atlantic Partners, LLC. This is what the company says:

“Eli Lilly and Company (NYSE:LLY) contributed to performance in the fourth quarter. While shares underperformed, our underweight position versus the benchmark resulted in a positive contribution to relative returns. Lilly shares were weak following an uncharacteristic third-quarter earnings miss driven by softer-than-expected sales of its blockbuster diabetes and obesity drugs. The company blamed this partly on wholesaler destocking. Lilly reinforced its view that end demand for the drugs remains strong”.

Overall, LLY ranks 1st on our list of best pharma stocks to buy for long term growth. While we acknowledge the potential of pharmaceutical companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.