Pharmaceutical corporations have long been significant drivers in improving and impacting modern healthcare. Despite occasional controversy, pharmaceutical companies are the backbone behind innovative treatments for some of the most severe diseases afflicting society. While the cures for some conditions such as cancer, diabetes, and cardiovascular disease are still a mile away, each new development to treat these ailments can be a catalyst for investors. This makes pharma stocks a major pick up.

Looking at its industry, we see that annual sales in the global pharmaceutical industry recently surpassed $1.2 trillion. A key business model advantage of these industries includes their patented products that result in high recurring revenues and even higher margins. For investors looking for high-growth companies, volatile pharma companies are some of the first places to look.

As a result of their enduring significance in healthcare, the pharmaceutical industry is an ideal location for investors seeking both short-term and long-term investment opportunities. here are three stocks with a combination of passive income, and huge long-term potential that could potentially make you a millionaire!

Top Pharma Stocks: Eli Lilly and Company (LLY)

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Eli Lilly and Company (NYSE:LLY), a pharma industry leader that is best known for marketing and developing obesity medications. The company has been showing nonstop growth for over a decade. Yahoo Finance analysts estimate that the stock will trade in a one-year range between $540-$1000, with an average of $826.94.

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Recently, Eli Lilly’s market capitalization has surpassed all other healthcare stocks around the globe, reaching approximately $700 billion. This value has large ties to its potential appreciation of two products: Mounjaro and Zepbound. The former is a medication for diabetes, while the latter aids in weight loss. With news that Eli Lilly’s potential Alzheimer’s therapy, donanemab, might secure FDA approval later in the year, investors can be confident in this company’s continued dominance in sales and success.

Regarding the company’s financials, it may be the first pharmaceutical company to reach $1 trillion in market cap. Nonetheless, the company has managed to maintain strong margins hovering around 30%! While its valuation is certainly higher than its industry average, we see this as an optimistic signal for Eli Lilly’s continued high-growth.

Merck & Co. (MRK)

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Merck & Co. (NYSE:MRK) operates via two divisions: the pharmaceutical division, and the Animal Health division. Its diversification in revenue sources that range from human to veterinary solutions has allowed MRK to maintain a nonstop uptrend for the past five years. Analysts estimate that the stock will trade between a one-year range of $118-$155, with an average of $138.98.

Last week, MRK’s single biggest treatment, Keytruda, was approved by the European Commission. In conjunction with chemotherapy, Keytruda is expected to continue reducing the risk of mortality by 28%. This expansion into new markets has boded well with their recent quarterly report, which showed promising forward guidance. Not only did Keytruda sales grow by 20%, but worldwide sales also saw a strong 9% QOQ growth.

Valuation-wise, while Merck’s TTM P/E ratio of 144.11 times sits incredibly inflated, analysts expect its FWD P/E to settle at a much more attractive 14.92x in the coming years. With nearly half its remaining pipeline nearing regulatory approval, Merck is poised to see continued growth and profitability. If you are going to grab any pharma stocks, grab this one.

Pfizer (PFE)

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Pfizer (NYSE:PFE) is another leading pharmaceutical producer that dominates the global oncology and neurological disorder drugs markets. According to Yahoo Finance analysts, the stock will trade between a one-year price range of $26-$45, with an average price of $31.10.

Despite its downward move after demand for COVID-19 vaccines declined, investors on the street have once again begun eyeing this company for its relatively low valuation. In addition, retail investors have been attracted to its consistently growing 6.18% dividend yield.

Not only is this company on track to becoming a cheap, dividend aristocrat, but it has also seen potential in a recent FDA approval. This past week, the FDA greenlit Pfizer’s Beqvez, a hemophilia B gene therapy able to rival competitors like Hemgenix. This FDA approval in particular is interesting due to its offering of a one-time treatment, rather than monthly infusions.

While PFE’s financials are not looking as healthy as other competitors, its valuation remains unmatched. With its P/E Non-GAAP (FWD) ratio of 11.61 times sitting nearly 40% lower than its industry median, investors should remain confident in PFE as a discounted, yet strong pharma competitor. This is one of the top pharma stocks on the market.

On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.

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