Summary: With the pharmaceutical industry’s worth measured in trillions, it’s no wonder that investors worldwide are eager to tap into its remarkable growth potential. In this guide, we’ll unveil the 3 best drug stocks to watch in 2024, accessible with popular online stock brokerages like Interactive Brokers and eToro.
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What are drug stocks?
Investing in the pharmaceutical industry – what to consider
Here are some key considerations when investing in the pharma industry:
- Pipeline and product portfolio: Assess the pharmaceutical company’s product pipeline. Look for a diversified portfolio of drugs, including potential blockbuster drugs. Evaluate the stage of development and the potential market impact of these drugs;
- Regulatory environment: Understand the regulatory landscape. Regulatory approvals from agencies like the FDA (U.S.) or EMA (Europe) can significantly impact a pharmaceutical company’s success. Keep an eye on regulatory changes and any pending approvals;
- Intellectual property: Check the company’s patent portfolio. Patents protect a drug’s exclusivity; when they expire, generic competition can reduce profits. Know when key patents are set to expire and how the company plans to address it;
- Clinical trial results: Investigate the results of ongoing and completed clinical trials. Positive outcomes can boost stock prices, while negative results can have the opposite effect. Understand the risks associated with clinical trials;
- Market competition: Analyze the competitive landscape. Identify other companies with similar drug portfolios and assess their market positions and competitive advantages;
- Revenue and earnings growth: Review the company’s financials, focusing on revenue and earnings growth over the years. Consistent growth is a positive sign;
- Dividends and share buybacks: Some pharmaceutical companies offer dividends and engage in share buybacks. These can provide additional returns to investors;
- Research and development (R&D) investment: Look at the company’s commitment to R&D. A robust R&D pipeline is vital for long-term success in the industry;
- Market trends: Stay updated on healthcare and pharmaceutical industry trends, such as personalized medicine, biotechnology advancements, and shifts in global healthcare policies;
- Global reach: Consider a company’s international presence. Expanding into emerging markets can be a growth opportunity;
- Risk management: Be aware of potential risks, including legal challenges (e.g., patent disputes), pricing pressures, and adverse events related to drugs in the market;
- Management team: Assess the leadership team’s experience and track record in the pharmaceutical industry. Strong management can navigate challenges effectively;
- Valuation: Evaluate the company’s valuation metrics, such as price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio, in comparison to industry peers;
- Diversification: If you’re building a pharmaceutical portfolio, consider diversifying across companies with different risk profiles and areas of expertise;
- Long-term perspective: Pharma investments often require a long-term horizon. Be prepared for potential volatility and fluctuations in stock prices.
3 best drug stocks to watch in 2024
Now that you have gained a deeper understanding of the factors to consider when contemplating an investment in the pharmaceutical industry or big pharma, you are well-equipped to confidently embark on your investment journey.
Here are our picks for the 3 best drug stocks at the forefront of innovation and healthcare advancements:
- AbbVie (NYSE: ABBV);
- Johnson & Johnson (NYSE: JNJ);
- Pfizer (NYSE: PFE).
You may also wish to explore disease-focused stocks for a specialized approach within the pharmaceutical sector. Explore these guides for a comprehensive analysis of investment opportunities centered around particular medical conditions:
- The Top 3 Alzheimer Drug Stocks to Consider;
- The 3 Best Cancer Drug Stocks to Explore;
- Top 3 Obesity Drug Stocks to Buy.
To securely invest in the pharmaceutical sector, consider these brokers:
1. eToro
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Now, let’s dive in deeper.
Best drug stocks to watch in 2024 #1: AbbVie
2023 Q3 Market Capitalization: $270.9B
2022 Revenue: $58.1B
2022 Earnings: $11.8B
AbbVie Inc. (NYSE: ABBV) is an American pharmaceutical company focusing on the research and development of various therapeutic areas, including immunology, oncology, neuroscience, and more. A standout product in AbbVie’s portfolio is Humira (adalimumab), approved for treating autoimmune diseases such as rheumatoid arthritis, Crohn’s disease, plaque psoriasis, and ulcerative colitis.
AbbVie’s innovative approach to addressing complex medical conditions, coupled with its robust revenue stream and consistent dividends, positions it as an enticing prospect for pharmaceutical sector investors.
AbbVie is publicly listed on the New York Stock Exchange (NYSE) under the stock ticker ABBV and is a component of the S&P 100 and S&P 500.
AbbVie stock price today
Best drug stocks to watch in 2024 #2: Pfizer
2023 Q3 Market capitalization: $191.9B
2022 Revenue: $100.3B
2022 Earnings: $31.4B
Pfizer Inc. (NYSE: PFE) is a globally recognized American pharmaceutical corporation headquartered in New York City, New York. The company’s research efforts encompass a wide spectrum of healthcare areas, including vaccines, oncology, cardiology, and infectious diseases. Notably, Pfizer has been at the forefront of the fight against global health crises, such as developing the first authorized COVID-19 vaccine.
Pfizer is publicly listed on the New York Stock Exchange (NYSE) under the stock ticker PFE and is a constituent of the S&P 100 and the S&P 500.
Pfizer stock price today
Best drug stocks to watch in 2024 #3: Johnson & Johnson
2023 Q3 Market capitalization: $390.6B
2022 Revenue: $94.9B
2022 Earnings: $17.9B
Johnson & Johnson (NYSE: JNJ) is a globally renowned American multinational corporation with a rich legacy in pharmaceuticals, medical technologies, and consumer health products. Johnson & Johnson’s impact on healthcare is far-reaching. The company’s pharmaceutical division has been responsible for pioneering groundbreaking medications, medical devices, and healthcare solutions that have transformed countless lives. Simultaneously, its consumer health products have earned the trust of consumers worldwide, making Johnson & Johnson a household name synonymous with quality and reliability.
Johnson & Johnson is publicly listed on the New York Stock Exchange (NYSE) under the stock ticker JNJ and is a component of major stock indices like the Dow Jones Industrial Average (DJIA), the S&P 100, and the S&P 500.
Johnson & Johnson stock price today
Risks of investing in the pharmaceutical industry
Investing in pharmaceutical stocks entails a range of risks beyond regulatory approval challenges, including:
- Increased generic competition: Growing competition from generic drugs can reduce market share and profit margins;
- Product liability and legal risks: The medical risks tied to pharmaceutical products expose companies to product liability and legal issues. Safety concerns can lead to drug recalls, and pharmaceutical companies frequently contend with litigation;
- Necessary technological innovations: Constant technological advancements are required to maintain competitiveness;
- Counterfeit drugs and quality control: Ensuring the quality and authenticity of pharmaceutical products is crucial to reputation and safety;
- Reimbursement challenges: To ensure the commercial success of approved drugs, pharmaceutical firms must navigate the complexities of securing reimbursement from institutional payers, such as public and private health insurers, who often exert pressure to set drug prices lower than desired targets;
- Patent expirations: When patents expire, sales of previously lucrative products can plummet, impacting revenue significantly.
Navigating these risks involves careful research, diversification, and monitoring industry developments to make informed investment decisions.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about drug stocks
What drug stocks to buy now?
Notable players in the pharmaceutical drug arena include Pfizer, Johnson & Johnson, and AbbVie.
Where to buy drug stocks?
You can invest in drug stocks via regulated online brokers like Interactive Brokers and eToro.
How to invest in drug stocks?
To invest in drug stocks, choose a reputable online broker, create an account, deposit funds, search for your desired drug company by their ticker symbol, determine your investment amount and order type, and complete your purchase.
Are drug stocks a good investment?
Drug stocks often appeal to income-focused investors due to their potential for attractive dividends. Yet, the substantial expenses and extended timelines from drug discovery to approval underscore the inherent risks of investing in this sector.
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