A few years ago, Eli Lilly (NYSE: LLY) was far from the hottest stock in the biopharmaceutical world. But times have changed. Today, Lilly ranks as the biggest healthcare company in the world. It still has tremendous growth prospects with its diabetes, obesity, and Alzheimer's disease drugs.

So is Lilly the top stock for healthcare investors right now? Nope. Forget Eli Lilly. Here are three biotech stocks to buy instead.

1. Amgen

You might be surprised to see Amgen (NASDAQ: AMGN) on a list of better biotech stocks to buy than Eli Lilly. While Lilly's shares have soared more than 50% year to date, Amgen is up by only a high single-digit percentage. Amgen also posted a net loss in the first quarter of 2024 based on generally accepted accounting principles (GAAP).

However, Amgen blows Lilly away on one important front -- valuation. Its shares trade at less than 16.2 times forward earnings. Meanwhile, Lilly's forward earnings multiple is a sky-high 66.7.

Sure, Lilly should have stronger growth prospects, thanks especially to soaring sales for Mounjaro and Zepbound. This puts the drugmaker's lofty valuation in perspective. But Amgen has pretty good growth opportunities as well: Ten of the company's products generated double-digit volume growth in the first quarter. The company also has a loaded pipeline, with 25 late-stage programs.

Amgen trounces Lilly when it comes to dividends, too. Lilly's forward dividend yield is 0.6%, only a fraction of Amgen's yield of 2.9%.

2. Vertex Pharmaceuticals

Much of Eli Lilly's anticipated growth is already baked into its share price, but I don't think that's the case for Vertex Pharmaceuticals (NASDAQ: VRTX). Granted, Vertex's forward earnings multiple of 29 is relatively high. However, its price-to-earnings-to-growth (PEG) ratio is a low 0.6, reflecting an attractive valuation.

Some of Vertex's growth will come from its core cystic fibrosis (CF) market. The company enjoys a monopoly in treating the underlying cause of the rare genetic disease. It could soon expand that monopoly with the pending U.S. and European approvals of a triple-drug CF combo featuring vanzacaftor.

Most of Vertex's growth, though, is likely to come from non-CF drugs. It's ramping up the commercial launch of Casgevy in treating sickle cell disease and transfusion-dependent beta-thalassemia. The big biotech innovator could also win U.S. approval of suzetrigine in treating acute pain in the first half of 2025.

Vertex is evaluating inaxaplin in a phase 3 study targeting APOL1-mediated kidney disease (AMKD). There are no approved therapies that treat the underlying cause of AMKD, and it affects more patients than CF does. Vertex's pending acquisition of Alpine Immune Sciences will give it another late-stage candidate, povetacicept, which targets the rare kidney disease IgA nephropathy.

3. Viking Therapeutics

Unlike Lilly, Amgen, and Vertex, Viking Therapeutics (NASDAQ: VKTX) doesn't have any approved products on the market yet. And Viking still isn't profitable. However, with a market cap of under $6 billion and a promising pipeline, this biotech stock could have the most room to run.

Earlier this year, Viking announced spectacular results from a phase 2 study of its experimental obesity drug VK2735. The dual GLP-1/GIP receptor agonist achieved greater weight loss after 13 weeks of treatment than Lilly's tirzepatide (marked as Mounjaro and Zepbound) and Novo Nordisk's semaglutide (marketed as Ozempic and Wegovy) did in clinical trials.

If VK2735 is successful in phase 3 testing and goes on to win regulatory approvals, Viking will almost certainly be worth much more than it is today. And this drug isn't the only potential huge winner in the company's pipeline. Viking's VK2809 is in phase 2 testing as a treatment for nonalcoholic steatohepatitis (NASH). Some analysts predict that the NASH therapy market could top $100 billion, rivaling the obesity drug market.

Should you invest $1,000 in Amgen right now?

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Keith Speights has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool recommends Amgen and Novo Nordisk. The Motley Fool has a disclosure policy.

Forget Eli Lilly: 3 Biotech Stocks to Buy Instead was originally published by The Motley Fool