Over the past ten years or so, Vertex Pharmaceuticals (NASDAQ: VRTX) has done what few biotech firms have managed which is to deliver life-changing treatments while maintaining a fortress-like balance sheet and growing the top line.
Anchored by its cystic fibrosis franchise, particularly the blockbuster Trikafta, Vertex has carved out a market opportunity in a high-barrier sector with minimal direct competition.
Yet the story isn’t just about what’s working now but more whether Vertex has enough firepower in its pipeline to justify its sky high valuation, and whether it can defend the premium of 27.4x forward earnings, against a rising tide of innovation and competition.
The Crown Jewel Trikafta Keeps Delivering
Vertex’s rise has been powered by its CF drugs, with Trikafta/Kaftrio driving $11.02 billion in 2024 revenue, up 12% year over year.
The company’s leading position in this segment is unmatched after the FDA approved ALYFTREK, a once-daily CFTR modulator, and granted Trikafta expanded approval for 94 additional mutations, bringing the total to 272.
Those drugs increase the addressable CF patient population materially and give Vertex a longer runway for growth in its core franchise.
New Drugs and Acquisitons Lead to Diversification
While cystic fibrosis treatments like Trikafta have cemented its reputation and revenue base, the leadership team has made it clear that while CF may be where the story began, it’s not where it ends.
A major plus for bulls came when the FDA green lit JOURNAVX, a novel non-opioid pain therapy. That was a tectonic shift not only for shareholders but also for the industry at large because it marked a major breakthrough. Unlike many other painkillers, JOURNAVX keys in on sodium channels that are specific to pain-transmitting nerves so it’s highly effective and also avoids the risk of addiction that’s common with opioid-based treatments.
Clinical trials were a win with patients undergoing procedures like bunion removals and abdominoplasties sending feedback of meaningful pain relief, without the historic side effects of strong pain meds.
Still, JOURNAVX is just one piece of a broader push to diversify Vertex’s pipeline and the top brass are spending aggressively in areas where effective treatments are still hard to come by.
Last year alone, Vertex invested $3.63 billion into R&D, a nearly 15% increase from the year before. Those dollars are being channeled into programs aimed at APOL1-mediated kidney disease, IgA nephropathy, and type 1 diabetes, all of which represent significant market opportunities and real, ongoing patient needs.
Another major development came through Vertex’s work in genetic medicine. In collaboration with CRISPR Therapeutics, it secured FDA approval for Casgevy, a cutting-edge gene-editing therapy designed to treat sickle cell disease and transfusion-dependent beta thalassemia.
Vertex Spanning Up Others to Build Future Revenues
Vertex is also sharpening its edge through acquisition. Last year, the Board approved the acquisition of Alpine Immune Sciences for $4.9 billion, a key buy that broadens its capabilities in immunology and kidney-related diseases.
Alpine brings a slate of assets that fit neatly into Vertex’s long-term roadmap of high-potential therapies in markets that are underserved, but growing.
The numbers are signaling good times to come with Vertex reporting $2.91 billion in product revenue last quarter, up 16% year over year and well ahead of analyst expectations.
Earnings came in at $3.98 per share, a bit lower than the prior year’s $4.20, albeit that dip is easily explained by a heavier tax bill and stepped-up investment in future innovation.
The company isn’t blinking. For 2025, Vertex is forecasting revenue between $11.75 and $12.0 billion, signaling strong demand for its CF treatments and optimism about the rollout of its newer offerings.
Is Vertex Stock Still a Good Buy?
Trading at 27.4x forward earnings, VRTX looks expensive compared to the sector median of 16.6x but the stock trades below its own 5-year average multiple so investors may not be fully pricing in the potential upside from its next wave of innovations.
Vertex is transforming into a multi-platform biotech juggernaut with meaningful optionality in gene editing, pain management, rare diseases, and autoimmune conditions. It has zero debt, a double-digit growth rate, and a disciplined leadership team that knows how to allocate capital.
If there’s a knock, it’s valuation but investors often pay a premium for quality and visibility. With its strong pipeline, expanding indications, and focus on areas with few competitors, VRTX is a compelling long-term play, especially for biotech investors looking for a mix of defensive strength and high-upside innovation.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.