Summary: The healthcare market’s ever-growing demand for oncology medication has driven up the sales of cancer drugs. Pharmaceutical companies focused on cancer treatments have intensified their research, development, and production to answer this need, gaining a surge of new revenue in the process. This article will highlight the three best cancer drug stocks to buy in 2024 through an intermediary investing platform like eToro.
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What are cancer drug stocks?
About
As one of the most infamous diseases of our age, cancer is a malign and brutal condition with limited cure and treatment methods. However, due to advanced research and ongoing efforts by pharmaceutical, biotech, and healthcare companies, getting diagnosed with cancer no longer implies the worst-case scenario.
Why you should invest in cancer drugs
In recent years, pharmaceutical companies have experienced steady and sustainable growth, making them a target for many investors. To further stress the need for a production increase of cancer drug companies, 2023 has witnessed a severe cancer drug shortage, affecting millions of patients in the U.S. only.
However, the increased demand for cancer drugs has boosted the value of the affected pharmaceutical companies, leading to an even bigger rush on the price of cancer drug stocks. Due to an increased demand coupled with pushes in research, development, and production, many investors have flocked toward cancer drug stocks to capitalize on this trend.
Three best cancer drug stocks to buy
The global cancer drug industry’s annual revenue amounted to $165 billion in 2022, with projections estimating that it will reach $361 billion by 2028, with a compound annual growth rate (CAGR) of approximately 13.95%.
An estimation of the compound annual growth rate going near 14% appears quite lucrative, so cancer drug stocks might potentially be the investing opportunity you are looking for.
In any case, here is our choice of the three best cancer drug stocks to buy in 2024, according to the sales number of their products, market capitalization, previous financial performance, and future growth projections:
- Merck (NYSE: MRK);
- Johnson & Johnson (NYSE: JNJ);
- Bristol Myers Squibb (NYSE: BMY).
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1. eToro
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1. Merck
Merck has made its name for the world’s top-selling cancer drug in 2023 as of December, Keytruda. It is used to treat 16 types of cancer, including early-stage cancers such as the hazardous triple-negative breast cancer (TNBC).
Besides Keytruda, Merck is known for the HPV vaccine Gardasil, anti-HIV/AIDS drug Isentress, and others. In fact, sales of Gardasil have seen an above-expected performance by the end of the first half of 2023.
One of the leading Big Pharma stocks, Merck, is a Dow Jones Industrial Average and S&P 100 component. The company is also listed as 69th on the Fortune 500 and 73rd on the Forbes Global 2000 lists.
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2. Johnson & Johnson
Founded in 1886 by the Johnson brothers and based in New Brunswick, the company is a crucial component in the healthcare sector. Darzalex, a product of its subsidiary, Janssen, is an anti-cancer antibody medication used to treat patients with newly diagnosed multiple myeloma. It has reported a revenue of $8 billion, a growth of almost 33% in 2022 alone.
Besides Darzalex, Johnson & Johnson is known for household consumer products like Band-Aid, Neutrogena, and Tylenol, which the company spun off to Kenvue in July 2023.
As one of the most prominent cancer drug stocks, JNJ is a Dow Jones Industrial Average component. Johnson & Johnson is in the 40th place on the Fortune 500’s 2023 list and is just one of the two U.S.-based companies with an AAA prime credit rating.
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3. Bristol Myers Squibb
Based in Princeton, New Jersey, BMS is a Big Pharma company and one of the world’s largest pharmaceutical companies. Opdivo, its most sought-after medication, treats several types of cancers, including melanoma, lung cancer, and kidney cancer. The product generated revenues of $8.3 billion in 2022, making Bristol Myers Squibb one of the best cancer drug stocks to buy in 2024.
Apart from cancer drugs, the company is known for developing and commercializing advanced and innovative therapies for various medical conditions like diabetes, cardiovascular diseases, and hepatitis.
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Things to consider when buying best cancer drug stocks
When purchasing cancer drug stocks, you need to consider some vital characteristics of the company you are investing in, along with the broader industry and sector. Those include:
- The company’s product portfolio and pipeline: Consider the range of drugs, treatments, and products offered by the company. Make sure it has diverse sources of revenue and a portfolio that will not collapse in case of one asset failing;
- Drug trials: Successful drug trials and market licenses can provide an enormous boon to the company’s revenue;
- Growth prospects: Clinical development and tests are expensive, so prioritize investing in companies that can sustain such efforts, such as those with large market capitalizations, cash reserves, and manageable debt levels;
- Patents: Patents are crucial in cancer drugs. Invest in companies with exclusive patent rights to well-performing medicines, such as those listed in this article;
- Leadership: The company’s management board can steer the ship toward or away from success. Check for a veteran management team with an extended history of success in the cancer drug industry;
- Partnerships and acquisitions: Collaborations between multiple pharmaceutical companies foster innovation and can lead to mutually increased stock value, so having that in your candidate is a welcome bonus.
Pros and cons of investing in best cancer drug stocks
Investing in cancer drug stocks shows promise for significant future gains, but all investments carry some risk, and each asset can have a potential downside. Some of the pros and cons of investing in cancer drug stocks include:
Pros
- Innovation and research: The oncological industry is rapidly advancing as innovative research leads to discoveries in cancer treatment methods. Buying cancer drug stocks gives investors access to the cutting-edge technology unlocked by these pharmaceutical companies;
- High demand: Cancer has become an increasingly present disease in our society, leading to a consistently high need for effective drugs and a stable supply for cancer drug companies;
- Potential profitability: Potent cancer drugs can drive hefty revenues, giving significant profits to companies that create and distribute them. Stakeholders in these companies share these gains as well;
- Diversification: Pharmaceutical companies in cancer drugs usually sell multiple types of treatment, providing a diversified portfolio of medical assets. A diverse portfolio mitigates risks;
- Duration: Cancer treatments are commonly ongoing, requiring patients to take cancer drugs over long periods. This extended timeline favors cancer drug suppliers.
Cons
- Regulatory obstacles: The cancer drug companies’ success depends on various regulations and legislation that can significantly impact the outcome of their commerce. Prolonged drug approval delays and recalls can crash the price of cancer drug stocks.
- Competition: The cancer drug market is fierce, with many Big Pharma companies competing to develop and market their medications. Intense competition affects the market share and pricing power;
- Patent expiration: After the cancer drug’s patent expires, generic producers can drive down sales and thus lead to a decline in demand for the patent-holding company;
- Ethical concerns and criticism: Customers and investors alike can have ethical concerns about some of the marketing and pricing policies of cancer drug companies;
- Healthcare policy changes: Healthcare policies and regulations can reshape treatment pricing and market access. Political factors can also introduce uncertainty into the sector.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the three best cancer drug stocks to buy in 2024
Can you invest in cancer drug stocks?
Yes, the general public can invest in cancer drug stocks. In fact, most of the top-performing cancer drugs tend to come from publicly traded companies.
What are some of the best cancer drug stocks?
Our choice of the best cancer drug stocks in 2024 for this guide includes Merck (NYSE: MRK), Johnson & Johnson (NYSE: JNJ), and Bristol Myers Squibb (NYSE: BMY).
Are cancer drug stocks a risky investment?
All investing bears some risk. While cancer drug stocks show promise, past performance does not necessarily guarantee future gains.
How do you buy cancer drug stocks?
You can buy cancer drug stocks using an online investing service like eToro.
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