NEW YORK (CNNMoney.com) -- To quote Frank Sinatra, Big Pharma stocks are having "a very good year."

Drug company stock prices have climbed nearly 10 percent year-to-date, nearly tripling the performance of the S&P 500 index. Compare that to 2005, when drug stocks slipped 5 percent, despite an increase in sales.

Renewed investor confidence, buoyed by strong earnings forecasts from companies in the first half of the year, are driving the stocks, analysts say.

Merck (up $0.03 to $41.98, Charts) is leading the way with a 24 percent surge this year, while Pfizer (down $0.08 to $28.13, Charts) has placed second with a 15 percent gain. Both Merck, the fourth-largest U.S. drug company, and Pfizer, the biggest drug maker in the world, have benefited from price surges during July and August, after the companies announced strong second quarter earnings.

Merck - and other members of Big Pharma - also seem to be benefiting from an increase in prescription volumes, stemming from increased coverage from the new Medicare plan, implemented on Jan. 1.

"The acceleration in prescription growth seen year-to-date is broad-based, likely driven by the Medicare Drug Benefit," wrote James Kelly, analyst for Goldman, Sachs & Co., in a note published Sept. 18.

Bristol-Myers Squibb (up $0.32 to $25.03, Charts) and Wyeth (down $0.67 to $49.92, Charts) each gained 9 percent in stock price year-to-date, though these companies have demonstrated stomach-turning volatility. The stock price for Johnson & Johnson (down $0.26 to $63.97, Charts), a company that makes drugs, consumer products and medical devices, edged up 3 percent this year. Schering-Plough's (up $0.04 to $21.35, Charts) stock price notched up 2 percent, and trading has been volatile.

Among the major drug makers, Eli Lilly & Co. (down $0.06 to $55.91, Charts) was the one company to suffer a stock price decline. Lilly's stock price slipped 4 percent year-to-date, mostly because of a steep downturn in March and April.

Barbara Ryan, analyst for Deutsche Bank North America, believes that the drug industry will continue to make gains. In a Sept. 20 report, Ryan wrote that the U.S. drug industry is in the "early innings of improving performance driven by rising EPS forecasts."

Ryan estimates that Merck will continue its meteoric climb, projecting a 12-month gain of about $4 a share, or 9 percent, fueled by its potential blockbusters Gardasil, a cervical cancer vaccine approved in June by the Food and Drug Administration, and the diabetes treatment Januvia, slated for FDA decision in mid-October. Gardasil was also approved by European regulators on Thursday.

But all is not well for Merck. The New Jersey-based drug giant still faces more than 14,000 lawsuits related to Vioxx, the arthritis painkiller and former blockbuster that the company pulled off the market in 2004 because of heart attack risks, evaporating $2.5 billion in annual sales.

Merck's stock dropped 5 percent in the two years since the Vioxx withdrawal, compared to the S&P 500's gain of 19 percent during that period. This has led many analysts to believe that Merck's Vioxx woes are priced in, even though many analysts forecast a $30 billion hit for Merck in terms of legal damages.

"While the uncertainty of the Vioxx litigation remains, we continue to believe that the costs will be paid out beginning several years from now, and that they will be at a level which is entirely manageable for Merck," wrote Ryan.

But while Big Pharma seems to be making a comeback, the industry still has a long way to go to regain its former glory. The industry's stock price has plunged 20 percent over the last five years. This performance seems particularly bad when compared to the S&P 500, which has surged 47 percent since September, 2001.

The analysts quoted in this story do not own shares of company stocks mentioned here, though their firms may make a market in them.

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