Summary: The pharma industry’s worth is measured in trillions. Consequently, a lot of investors are looking to invest in it and capitalize on its growth. In this guide, we’re taking a look at the 5 best pharma stocks to buy in 2024 on online stock brokerages such as eToro.
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What are pharma stocks?
Pharma stocks
The pharma sector is diverse. Companies operating within it are responsible for a wide range of products, including prescription and over-the-counter medications, vaccines, and biotech treatments. Consequently, the pharma industry gives investors a distinctive and varied range of investment opportunities, often carrying the potential for substantial returns.
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5 Best Pharma Stocks to Buy in 2024
Given the number and diversity of companies within the pharma industry, spotting the right investment opportunities that align with your objectives and strategies can be difficult. Therefore, we have compiled a short roster of firms at the forefront of the industry, each operating in a different niche.
Our top 5 pharma stocks to buy in 2024 are:
- AbbVie (NYSE: ABBV);
- Pfizer (NYSE: PFE);
- Novartis (NYSE: NVS);
- Johnson & Johnson (NYSE: JNJ);
- AstraZeneca (LSE: AZN).
1. AbbVie
AbbVie (NYSE: ABBV) has a strong product portfolio which includes drugs such as Venclexta, used to treat leukemia, as well as Rinvoq and Skyrizi, some of the best-selling anti-inflammatory drugs used to treat diseases such as Crohn’s. However, the company is also branching out, patenting Parkinson’s disease and macular degeneration treatments.
In addition to a diverse portfolio, investors will value AbbVie’s solid dividend growth. The company is also a part of the Dividend Achievers index. In other words, its dividend yield has been growing consistently for the past quarter of a century.
AbbVie stock price today
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2. Pfizer
Pfizer (NYSE: PFE) is a pharmaceutical company that generated a lot of buzz with Comirnaty, its COVID-19 vaccine developed in partnership with BioNTech. However, the company has a wide range of blockbuster drugs, including Ibrance and Xtandi, used in cancer treatment, and Prevnar, a pneumococcal vaccine. Moreover, it has a respiratory syncytial virus vaccine candidate awaiting approval.
In addition to a diverse revenue stream, long-term investors will welcome Pfizer’s solid consistent and high dividend yield (5.92% as of December 2023). Furthermore, Pfizer intends to acquire Seagen (NASDAQ: SGEN), an oncology company specializing in anti-body cancer treatments, which might help propel Pfizer even further.
Pfizer stock price today
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3. Novartis
Novartis (NYSE: NVS) is one of the five largest and most prominent pharmaceutical companies in the world, operating in a diverse range of sectors ranging from pharmaceuticals to genetics. Moreover, it has a solid dividend yield (3.77% as of December 2023), and some of its upcoming products, such as the urticaria drug, Remibrutinib, have the potential to sell well.
Novartis stock price today
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4. Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) relies primarily on its pharmaceutical products, which include immunology and cancer drugs. However, the company is also involved in a number of late-stage clinical trials to develop new medications and expand the applications of its existing ones. More interesting, however, are the company’s plans to separate its general consumer health branch from the rest of the company while also maintaining its dividend yield upward trajectory.
While the roadmap looks promising, investors are still waiting to see the outcome of the splitting decision, especially in the light of the lawsuits the company has been facing over its talc-based products.
Johnson & Johnson stock price today
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5. AstraZeneca
AstraZeneca (LSE: AZN) is one of the most innovative companies in the industry, especially in the oncology sector, with its blockbuster drugs Tagrisso, Imfinzi, and Lynparzaa. Beyond that, AstraZeneca has also expanded into rare-disease drugs through its acquisition of Alexion (NASDAQ: ALXN). Most importantly for long-term investors, though, the company does not face immediate patent expirations, so it has a solid edge over some of its competition.
AstraZeneca stock price today
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Things to consider when buying pharma stocks
Before you begin investing, it is essential that you conduct your own research and gain an understanding of different investment strategies and the broader stock market. The pharma industry can be highly volatile, and as with all investments, success is not guaranteed, especially in the short term. However, with a well-founded strategy, you can increase the likelihood of benefiting from its growth.
To make better-informed choices, consider factors such as:
- Pipeline and product portfolio: Companies with a diverse portfolio and a good number of well-selling drugs under their belts are generally more solid investments;
- Patents: If a company has a patent license on some of its products, it has a better chance to generate profit before the license expires and its competition starts selling the same drugs;
- Competition: The pharma landscape is highly competitive. Therefore, try to identify the major competitors and analyze their strengths and weaknesses to ensure your investment is prudent and profitable;
- Clinical trial results: Stay updated on the outcomes of experimental clinical trials. After all, positive results can greatly increase stock prices;
- Market trends: Stay to be up-to-date with the latest developments in the industry and figure out what sells better so that you can make a more profitable investment;
- Financial health and dividends: Examine the company’s financial reports to ensure they are not in a lot of debt and consider its dividend yield for long-term growth;
- Global presence: A solid global presence can diversify a company’s revenue streams.
Pros and cons of investing in pharma stocks
Engaging in pharma stock investments can be an exciting opportunity for growth and potential returns. However, it’s vital to recognize the associated risks. Here are some of the pros and cons to consider before investing:
Pros
- Constant demand: Drugs and treatments for all sorts of diseases are in constant demand, meaning the industry is highly profitable;
- Innovation and high reward potential: The pharma industry is known for innovation, and the recent COVID-19 pandemic demonstrated its drive to make breakthroughs with innovative drugs. Such innovation can lead to high rewards;
- Diversification: Since a lot of pharma companies have a global presence and diverse revenue streams, investing in them can give you exposure to international markets and diversify your portfolio;
- Dividends: Some pharma companies, like Pfizer, offer attractive dividend yields, which makes them attractive to long-term investors.
Cons
- Regulatory risk: Pharma companies must comply with strict regulations, so even the slightest mishap during approval processes can be detrimental;
- Patent expirations: When a company loses its exclusive rights to certain drug sales, its competition can erode its revenue by providing the same product;
- Pipeline dependence: Some companies heavily depend on a single product;
- Market competition: The pharmaceutical market is highly competitive and dynamic, so stocks can be volatile.
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 5 best pharma stocks to buy in 2024
How to buy pharma stocks?
To buy pharma stocks, investors can register an account with a regulated online broker such as eToro.
What are the top 5 pharma stocks to buy in 2024?
The top 5 pharma stocks to buy in 2024 include AbbVie (NYSE: ABBV), Pfizer (NYSE: PFE), Novartis (NYSE: NVS), Johnson & Johnson (NYSE:JNJ), and AstraZeneca (LSE: AZN).
Is investing in pharma a good idea?
The pharma industry is highly profitable and consists of various sectors. So, investing in pharma stocks can be a solid strategy. However, the industry is also volatile and competitive, so you must do a lot of research before investing.
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