2017 turned out to be a pretty good year for pharma and biotech stocks with the Nasdaq Biotechnology index and the NYSE ARCA Pharmaceutical index gaining 18.7% and 11.8%, respectively. Although the industry continued to face headwinds in the form of drug pricing scrutiny, pricing pressure, increasing competition, concerns regarding Amazon’s interest in entering the healthcare arena, fewer-than-expected acquisition deals and major pipeline setbacks, there were some positive developments as well. There was a significant surge in FDA approvals, investors appeared more comfortable with the drug pricing controversy and innovation won the day with the FDA granting approval to gene therapies for cancer as well as a rare form of blindness. Tax reforms are also expected to work in the sector’s favor with mergers and acquisitions (M&As) expected to pick up in the coming quarters.

New product sales ramp up, R&D success and innovation, continued strong performance from key products, growing demand for drugs especially for rare-to-treat diseases, an aging population, and increased health care spending are some of the factors that should keep the momentum in 2018.

As we start the New Year, here is a look at three drug stocks that look well-positioned for 2018 and are witnessing upward estimate revisions and have a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or #2 (Buy).

Alkermes plc (ALKS – Free Report): Alkermes is focused on the development and marketing of treatments for central nervous system (“CNS”) diseases. Key disease areas include schizophrenia, depression, addiction and multiple sclerosis. Earlier this year, the company said that its current commercial business has the potential to generate revenues in excess of $2 billion into the 2020s.

Alkermes also a strong late-stage pipeline representing transformative catalysts in 2018. The company could gain FDA approval by June 30 for a NanoCrystal dispersion of Aristada (schizophrenia). Meanwhile, Alkermes expects to complete filing a rolling submission for ALKS 5461 (major depressive disorder) in January with a potential advisory committee meeting and FDA decision in the second half of the year. The company also expects to submit a new drug application (“NDA”) for ALKS 8700 (multiple sclerosis) in the second half of the year. Data on ALKS 3831 (schizophrenia) is also due this year (metabolic study data in the first half and ENLIGHTEN-2 data in Fall 2018) – the NDA submission for this candidate is scheduled for the first half of 2019. Alkermes has a global license and collaboration agreement with Biogen (BIIB – Free Report) for ALKS 8700 for the treatment of multiple sclerosis.