4 Best Pharmaceutical Stocks to Watch in 2024

The COVID-19 pandemic saw a number of pharmaceutical firms participate in a breathless race to develop a life-saving vaccine, ultimately landing them on the radars of investors on a scale previously unseen.

While the inflated demand for these stocks has largely receded, the wider industry is still growing at a considerable rate in the US, expected to record more than $1.15tr in sales in 2024, and $1.47tr by 2028.

Crucially, the market’s stock is currently in a relative dip, with the S&P Pharmaceuticals ETF trading at $42 at the time of writing, 35% down from its 2015 peak of $65. Combined with the healthy projected growth, this could make the pharmaceutical industry a worthwhile bet for investors in 2024.

With this in mind, we have compiled a comprehensive guide on the best pharmaceutical stocks to buy in 2024.

What are Pharmaceutical Stocks?

Pharmaceutical stocks represent shares in companies within the pharmaceutical and broader healthcare industry. Though often perceived as merely responsible for the production of drugs and treatments, the industry also encompasses research, development, production, and marketing.

While investors in pharmaceutical stocks are always at the mercy of factors such as market demand and regulatory influence, the industry has a tendency to offer handsome returns for investors, and is consequently one of the most favored among retail investors.

However, with global health events such as COVID-19 generally causing major spikes in demand for the industry, investors must be wary of broader trends before making investment decisions. Investigating a given company’s research and product pipelines, for instance, is strongly advised.

Are Pharmaceutical Stocks a Good Investment in 2024?

The almost continual economic turbulence seen in recent years has brutally exposed the fragility of many organizations and their respective markets as a whole.

But the pharmaceutical industry, being an essential source of illness treatment, has stood relatively strong during this time. The NYSE Arca Pharmaceutical Index, for instance, saw its value increase by 5% during the pandemic, versus a downturn of nearly 20% for the S&P 500.

Unsurprisingly, this growth is set to continue. Fresh figures value the industry in the US at around $515bn in 2022, and predict a growth rate of more than 7.5% between 2023 and 2030.

This is clearly reflected in the rising number of new drugs receiving approval, with the FDA greenlighting 37 new drugs in 2022. Additionally, the pharmaceutical industry has witnessed a notable uptick in mergers and acquisitions (M&As) in recent years. Established companies are strategically consolidating to strengthen their positions in the highly competitive market landscape.

With this in mind, it is evident that many pharmaceutical companies are likely to offer stability to the portfolio’s of many investors.

A Closer Look at the Best Pharmaceutical Stocks to Buy

Having examined the state of the wider pharmaceutical industry and its potential to present opportunities to investors, all that remains is to analyze some of the best pharmaceutical stocks available in the sector.

1. Pfizer (PFE)

Pfizer’s stock has experienced a significant decline lately, losing almost half of its value in the past year and currently residing at a 53-week low. In contrast, the S&P 500 has seen a 24% increase.

This downward trend in Pfizer’s stock can be largely attributed to a decrease in sales of its Covid-related products. The company, in its December 2023 revenue guidance, anticipated a substantial drop of 90% in sales for this market segment compared to 2022, projecting around $8 billion. Following this announcement, Pfizer shares encountered their most substantial single-day decline since 2009.

It’s important to recognize that the pandemic, being an isolated event, inherently resulted in a temporary surge in demand, which cannot be sustained at the same level. Pfizer is currently navigating a transitional phase.

A notable development is Pfizer’s recent acquisition of the oncology company Seagen. Despite the expected 40-cent-per-share earnings reduction due to the acquisition’s cost, the newly acquired portfolio of cancer drugs is forecasted to generate over $3 billion in additional earnings in 2024.

Pfizer is concurrently implementing a cost-cutting program aimed at achieving $4 billion in savings. Despite the immediate impact of reacting to an isolated event, Pfizer’s earnings are poised for a potential rebound, especially with 19 new product launches on the horizon for 2024-25.

Considering these strategic moves and future prospects, Pfizer appears positioned to deliver positive returns for investors in the long run, despite the challenges faced during the post-Covid period.

2. Vertex Pharmaceuticals (VRTX)

Leading biotech firm Vertex has breezed through recessionary climates in recent years, adding nearly 85% to its value since the beginning of 2020.

The firm’s biggest strength is its vice grip on the $6bn therapeutic market for cystic fibrosis (CF), its dominance in this area seeing revenues jump by 11% to $7.3bn in the first three quarters of 2023.

Additionally, nearly a quarter of CF patients in Vertex’s core markets remain untreated but eligible for its therapies, meaning that significant new revenue opportunities still exist in this vertical.

But Vertex remains conscious of not pigeon-holing itself into a single therapeutic area. For instance, the firm recently achieved FDA approval for two milestone treatments, Casgevy and Lyfgenia, both representing the first cell-based gene therapies for sickle cell disease patients aged 12 and above.

Vertex’s pipeline is equally promising, the firm having recently received positive clinical trial results for a new medication targeting neuropathic pain. Meanwhile, late-stage study results for a next-gen CF drug are expected soon, in addition to the commencement of an ambitious program to develop a type 1 diabetes cure.

The stock has also proven historically reliable for investors, boasting a 1-year return of 46%, a profit to earnings ratio of 31.6, and an earnings per share of 13. These factors combined with and impressive product pipeline and seemingly perennial CF market dominance make Vertex a worthwhile investment in 2024.

3. Johnson & Johnson (JNJ)

Though one of the leading pharmaceutical companies by market share, Johnson & Johnson (J&J) has had a disappointing year, shedding nearly 8% of its value since January 2023.

However, it would appear that J&J is eyeing growth rather than market value, having recently triggered the largest restructuring in its history by spinning off its consumer health business. The newly-formed Kenvue debuted on the New York Stock Exchange in May at $22, earning J&J an estimated $3.8bn.

Thanks in no small part to the sale of Kenvue, J&J is expecting between 5% and 7% operational sales growth between 2025 and 2030.

J&J has also sought growth opportunities in the M&A market. It recently announced the acquisitions of cancer drug developer Ambrx and heart pump maker Abiomend for $2bn and $16.6bn respectively. The fresh revenue streams and product pipeline additions are likely to be major factors in J&J’s future growth prospects.

Moreover, with $15.7bn of free cashflow generated in the 12 months to September 2023, and less than $12bn paid out in dividends during that time, J&J stands in good stead to continue seeking acquisition deals and bolstering growth.

With a 3% dividend program added to the equation, J&J looks to have potential as a stock pick for 2024.

4. Moderna (MRNA)

Throughout 2023, Moderna’s stock experienced a gradual decline, witnessing a reduction of more than half its value since the beginning of the year.

Despite this overall downturn, the stock managed to recover partially on various occasions, with the most recent instance occurring on December 14. This recovery followed the announcement of trial results for Moderna’s new cancer vaccine, which demonstrated a 49% reduction in the risk of recurrence or death from skin cancer when combined with the immunotherapy drug Ketryda. This positive outcome led to a 15% surge in Moderna’s stock value.

It is essential to acknowledge that the majority of Moderna’s 2023 losses occurred in the first half of the year. However, the company successfully regained approximately 20% of its value in December. This recovery was largely attributed to the favorable trial results of its new oncology drug, potentially gaining approval in some countries by 2025.

In addition to these developments, Moderna possesses a robust product pipeline with several treatments in advanced development stages. Capitalizing on this, the company has outlined a five-year growth plan targeting $15 billion in revenue beyond its core business.

Considering these promising future prospects and with Moderna’s share price still undergoing a significant dip, investing in Moderna in 2024 could be a strategic move.

Where to Buy Pharmaceutical Stocks in 2024

Investors can choose to purchase Pharmaceutical stocks through various online brokerage platforms, and eToro emerges as a preferred option. eToro distinguishes itself with a user-friendly interface, minimal minimum deposit requirements, and the ability to trade fractional shares, making it particularly accessible for beginners.
Other well-regarded choices include Robinhood, Webull, and Charles Schwab.

1. eToro – Best platform to buy Pharmaceutical stocks

eToro stands out as a renowned stock broker, providing users with entry to Pharmaceutical stocks and a vast array of 2,400 global markets. Notably, all available stocks come with the advantage of being purchasable with 0% commission.

With a thriving global community exceeding 20 million traders, this brokerage sets itself apart through its competitive trading fees and absence of additional charges. It presents a fee-free environment for trading stocks and ETFs, coupled with the absence of account or deposit fees.
Functioning as a social trading platform, eToro encourages user interaction and communication within its trading community, reminiscent of social networking sites.

For investors based in the United States, the barrier to entry is minimal, requiring only a $10 minimum deposit without any supplementary fees. This affordability extends to investing in Pharmaceutical stocks, facilitated by eToro’s support for fractional share trading, allowing traders to acquire portions of higher-value stocks.

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

2. Robinhood – Commission-free stock investments

Robinhood, a widely recognized platform offering commission-free trading, has gained immense popularity for its user-friendly interface, amassing millions of users since its inception. Setting itself apart with a commission-free model, Robinhood extends this advantage by eliminating trading fees for stocks, ETFs, and options. Beyond conventional trading, the platform embraces social trading, creating a community-oriented environment reminiscent of popular social networks.

With a modest minimum deposit requirement, the option for fractional share trading, and the absence of account fees, Robinhood serves as a cost-effective entry point for investors. It is particularly well-suited for beginners seeking an affordable and user-friendly platform to embark on their investment journey.

3. Charles Schwab – Educational tools and resources for stock trading

Charles Schwab stands as a well-regarded online brokerage platform, acknowledged for its expansive range of investment options and comprehensive services that cater to a diverse investor base, earning praise for its reliability. Despite not adopting a zero-fees model, Charles Schwab compensates with a robust suite of research tools and educational resources, ensuring access to various financial markets and investment products through a user-friendly interface.

Accommodating a variety of account types, Charles Schwab’s platform caters to both novice and experienced investors. With a dedicated emphasis on customer service and a commitment to innovation, Charles Schwab distinguishes itself as a prominent choice for those seeking a comprehensive online brokerage experience. For the most up-to-date information, it is advisable to verify current details on their official website.

4. Webull – A modern and affordable brokerage platform

Introduced in 2018, Webull operates as a dynamic commission-free trading platform, renowned for its intuitive design and advanced features. Its popularity stems from a user-friendly interface equipped with real-time market data and analysis tools.

Specializing in equities and options, Webull caters to both novice and experienced traders, setting itself apart by offering commission-free trades across a diverse array of assets, including stocks and ETFs. The platform also stands out by supporting extended trading hours, providing flexibility for active traders.

Webull’s appeal is further heightened by its accessible mobile app and desktop platform, accompanied by the absence of minimum deposit requirements. These features collectively position Webull as an appealing choice for individuals seeking a modern and cost-effective trading experience.

Our Verdict on the Best Pharmaceutical Stocks to Buy in 2024

Despite a dip in market value for many of the biggest players (partly due to a drop-off in COVID-19 demand), the pharmaceutical market has displayed great resilience in recent years. Projected to hit $1.15tr in sales in 2024 and nearly $1.5tr by 2028, the industry clearly remains an attractive investment today.

This said, investors are encouraged to conduct thorough research prior to making any investment decisions. For the pharmaceutical industry in particular, an examination of a firm’s future pipeline is critical to assess its potential.

For those looking to purchase pharmaceutical industry stocks, TradingPlatforms recommends eToro as the best all-round online broker for most people.

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Pharmaceutical Stock FAQs