The current pandemic has renewed interest in pharmaceutical stocks. The entire medical industry has been expanding in recent years, thanks to an increase in demand for some very important drugs – and this affected drug stock prices as well.
Of course, as with other industries, the lockdown has caused problems for the large pharmaceutical companies, as fewer people are working in factories and much of the research can’t be done remotely. Nevertheless, it can be said that COVID-19 has had quite a positive impact on the pharma stocks and the entire pharmaceutical industry.
Pharmaceutical stocks are a good example of an investment that makes a good, stable investment in difficult times. Healthcare is usually one of the most stable industries, and drug stock will always be popular. After all, because even in countries with state-run medical care, people will continue to spend money on medicine—therapy, drugs or dietary supplements—regardless of high inflation or unemployment. Drug stock will always be in price, and some of the best pharmacy experts on the planet recommend supporting the industry.
Furthermore, the World Health Organization predicts that the number of people aged 60 and older will nearly double by 2050 compared to 2015 levels. This means that much more money will be spent on prescription drugs to enable older people to function. This means that both states and private companies need to invest in developing the medical industry and pharmaceuticals, which will cause top pharmaceutical companies to grow in the next few decades. In turn, this will cause a rise of pharma stocks for most investors.
That’s why we have prepared a list of some of the best pharmaceutical stocks to invest in the forthcoming years. World-wide investors can learn more about these major pharmaceuticals and how they weathered the recent global financial changes.
You can also learn more about other industries that are worth investing in - we have prepared a guide on how to invest in stocks for beginners. Explore our site for more stock and investor tips!
AbbVie Inc. (ABBV)
This U.S.-based biopharmaceutical company was founded to produce drugs and medicine in the early 2010s. Like many top pharmaceutical companies, AbbVie is shares have risen and fallen significantly over the past few years. It started at $50 in 2016, rose to around $120 in 2018, and then fell to around $65 due to various problems caused by the pandemic.
Nonetheless, the company's shares eventually rose to nearly $150 thanks to its biopharmaceutical operations that helped launch various cancer and Covid-19 treatments. It is one of the few pharmaceutical companies that managed to make money in a bad year on Wall Street, and offers investors a reliable and high dividend yield.
Amgen Inc. (AMGN)
Amgen is a California-based biopharmaceutical company focused on gene therapy. Since its founding in the 1980s, it has been one of the top pharmaceutical companies dealing with new therapies and biopharmaceutical applications. It offers drugs like Enbrel to treat severe arthritis, or the osteoporosis drug Evenity. Continuing research and development make it one of the major pharmaceuticals recognized worldwide.
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Gilead Sciences Inc. (GILD)
Gilead Sciences is a California-based biopharmaceutical company with a market value of about $70 billion. It focuses mainly on "orphan drugs" - that is, those treating very rare diseases and conditions and difficult for pharmaceutical companies to profit from, such as liver disease or heart problems. This means that pharma companies dealing in medicines like this have to rely partly on purchases by government agencies - for example, they can rely on the American PDUFA act.
Thanks to its partnerships with the U.S. government and the European Union, GILD is delivering steady growth among the top pharmaceutical companies. Compared to 2014, the company enjoyed 70% growth, despite its often controversial practices. It is worth buying the drug stock of this pharmaceutical company, even though it might get in hot water sometimes.
GlaxoSmithKline PLC (GSK)
The well-known British company GlaxoSmithKline is in the top ten largest pharmaceutical companies in the world. They designed the first malaria vaccine, and created one of the major brands of Covid vaccines. This pharmaceutical giant also has an extensive portfolio of drugs for respiratory diseases and HIV. GSK recently entered into an agreement to buy Sierra Oncology Inc. (SRRA) for a total of $1.9 billion to enhance its oncology portfolio.
The fast-growing company may be able to maintain its leadership position in the future if it executes plans to spin off its consumer-oriented products. GSK's shares in 2022 showed growth, although it is less than expected. This is not just one of the major pharma companies, but also one of the most respected cmpanies in the world - young graduates asking “Is major pharmaceuticals a good career path” often dream of working for GlaxoSmithKline.
Johnson & Johnson (JNJ)
Johnson & Johnson is a very well-known brand in both the cosmetics and healthcare sectors. J&J offers a wide range of products, including the anti-cancer drugs Darzalex and Imbruvica. It is also involved in clinical research and is likely to turn its cosmetics division into a separate company, thanks to the creation of one of the major brands of Covid-19 vaccines.
J&J is known as the Dividend King because it has raised its dividend every year for 59 years in a row. Since it spun off its consumer health division, the company has been expanding rapidly. Very few of the large pharmaceutical companies on the market can report such a steady growth, which has not been hindered by the pandemic.
Novartis AG (NVS)
Swiss company Novartis offers a wide range of pharmaceutical products, including drugs for neurology, immunology, dermatology, and heart health. They're the ones who make clozapine and diclofenac—if you play sports, you may have used their Voltaren ointment! Like many large pharmaceutical companies, Novartis made money in 2022 despite adverse conditions.
Its best-selling drug, Cosentyx, saw sales increase by 10%, boosting the company's growth. Novartis offers a diversified portfolio and increasing growth in the global drug stock market.
Pfizer Inc. (PFE)
This world-renowned U.S. company Pfizer has produced drugs like Viagra, Zoloft, Xanax and one of the more popular Covid-19 vaccines. In 2009, it acquired Wyeth, one of its most serious competitors, becoming one of the largest pharmaceutical companies in the world. Its pharma stocks used to develop at a high rate.
Investors have been trying to figure out what to make of Pfizer's stock since the end of the pandemic, now that the big boost from Covid-19 vaccines is mostly a thing of the past. Yes, Pfizer's pharma stocks are falling, but it's still a good buy because the drugs bring in billions of dollars – apart from the vaccine. The decline in value is small, and the company can be considered one of the top pharmaceutical companies in the world.
Why is it worth investing in pharmaceutical stocks?
Before investing in the best pharmaceutical stocks, it's important to remember that it's an investment in research. They help humanity—especially when it comes to medicine—but investing in experimentation has a serious drawback for the businessman.
Early-stage medical experiments may prove to be unproductive or not work at all—R&D is almost always a cost to the company, but in the case of large pharmaceutical companies it is necessary for their entire existence. Even drugs in phase 3 trials may fail in the long run.
Government agencies can also ban drugs that pass clinical trials—either because of side effects, or because they are too expensive (often based on legal acts like PDUFA). This all means that while the price of the drug stock is stable, sudden rises are never guaranteed.
On the other hand, however, biology, especially genetics, is developing rapidly these days, and no matter what, if someone doesn't invest in biology they could be left behind. Not only are you investing in a forward-oriented scientific industry that is highly profitable, but you are helping people, governments and can often write off R&D subsidies on your taxes. That's why it's often a good idea to buy shares in pharmaceutical companies and invest in them in other ways.