Biotechnology is regularly advancing, with scientists finding new ways to cure diseases and eliminate deadly vaccines. Just this past year biotech companies Pfizer
, Moderna, AstraZeneca, and Johnson & Johnson
all released innovative COVID-19 vaccines to help stop the coronavirus pandemic.
The ingenuity of biotech companies has many people interested in investing in biotech stocks. While investing in the right biotechnology can be lucrative, investing in biotech companies can be more volatile than stock investing.
If you’re interested in investing in biotech companies, I’ll run you through what you need to know and the best companies to get started with.
Why investing in biotechnology can be tricky
When you invest in a typical company that makes a product or service, your stock prices tend to ebb and flow based on product performance and the company’s future business goals. Investing in biotech companies, however, is a little bit different.
Biotech stocks can rise and fall quite often, especially while new drugs and medications are being run through clinical trials and awaiting FDA approval. Pharmaceutical companies whose drugs reach the clinical stage with success be worth investing in at that point. Unfortunately, it’s still a bit of a gamble until their drugs have been thoroughly tested and shown to produce the positive results intended. You might also need to wait for newer companies to go the IPO route and make their debut on the market.
The good news is, there are many larger big pharma companies available to invest in on NASDAQ that have a history of positive drug results, innovative technologies, and exciting future business goals. While these companies are producing treatments that can help us lead healthier, longer lives, you can also grow your funds by investing in the right candidates.
Best biotech stocks
Not sure where to get started? Here are 10 of the best biotechnology companies worth investing in.
1. Pfizer (NYSE:PFE)
One of the top pharmaceutical companies worth investing in right now is biotech giant, Pfizer. With the success of their COVID-19 vaccine, Pfizer saw an uptick in stock performance during the first quarter of this year, with earnings per share (EPS) growing by 42% and 47% year over year (YOY). Expert forecasts indicate another strong performance during the second quarter and throughout the rest of 2021.
On top of their mRNA vaccine developed for the coronavirus, Pfizer also has antivirals for COVID-19 in the works, as well as an mRNA novel flu vaccine in development. Right now, stock prices are relatively low, making it an ideal time to buy in. Pfizer also has a yearly dividend yield of 4%, if adding dividends is important to your portfolio.
2. Moderna (NASDAQ:MRNA)
Another top player in the coronavirus vaccine game is Moderna, who also employed mRNA technology to develop a two-shot vaccination, similar to Pfizer. Though Moderna is relatively new to the scene, its first commercialized product (the coronavirus 2-shot vaccine) has been a huge success and source of profit for this young biotech company. While Moderna expects to continue to see sales growth from its COVID-19 vaccine and perhaps booster shots, it's not realizing the pandemic for future sales growth.
Moderna is turning its attention to developing a CMV (cytomegalovirus) vaccine, which would help pregnant women and those with weakened immune systems. This vaccine is expected to see a phase three trial later this year. Other vaccines being developed right now include two cancer vaccines and a therapeutic drug for certain heart conditions.
Investing in this biotech stock now makes good sense as successful vaccination releases are likely to increase the price of this biotech stock in the future.
3. Astrazeneca (NASDAQ: AZN)
Another biotech company, AstraZeneca
that’s worth exploring as you build out your portfolio is AstraZeneca. Although this company’s stock has gone up and down repeatedly throughout 2021, the company has an optimistic outlook for the rest of the year. Despite trouble with their coronavirus vaccine (currently rated as 76% against catching the virus and 100% effective against serious strains), this non-for-profit vaccine is not on the company’s radar for growing its profitability. Its cancer drugs, diabetes treatments, and asthma pharmaceuticals are expected to help the company grow and exceed profit forecasts.
While shares are beginning to rise, investors may have mixed feelings about investing in AstraZeneca. Although you aren’t likely to earn big bucks in the next few months, this biotech company could be a great long-term investment for the right investor. The company’s shareholder returns have more than doubled since 2016 and many experts are recommending getting in now, while stock prices are still low.
4. Johnson & Johnson (NYSE: JNJ)
As one of the last names in biotechnology to come out with a coronavirus vaccine, Johnson & Johnson might seem like less of a smart buy than its other COVID-19 competitors. Like AstraZeneca, Johnson & Johnson does not expect to make money off of its vaccine but is expected to maintain strong business growth throughout the rest of 2021.
Right now, the company is forecasting yearly revenue of over $91 billion and has some exciting drug trials on the way. Johnson & Johnson is currently testing drugs and therapeutics for leukemia, prostate cancer, schizophrenia, and Chrohn’s disease (to name a few). No matter what happens with the company’s COVID-19 vaccine, it’s a safe bet that this pharmaceutical giant will continue to grow and profit.
5. Novavax Inc (NASDAQ:NVAX)
If you’ve heard the name Novavax in the news lately, it’s likely because this pharmaceutical company missed its opportunity to get in early with its coronavirus vaccine. Novavax was originally expected to release a version of this vaccine already, yet shared that the company would not file for authorization of its vaccine until Q3.
While this news has caused the stock to go down steeply for a few days, experts agree that this stock will eventually rebound. Although anything can happen, if Novavax can complete their COVID-19 vaccine trial and begin to market this drug, their stock is predicted to go up in the near future.
On top of this, Novavax’s coronavirus vaccine would be one of the most effective ones against COVID-19, which could mean big things for the biotech company once its drug is released. Getting in now could earn you big returns down the road.
6. Regeneron Pharmaceuticals (NASDAQ:REGN)
Regeneron Pharmaceuticals is perhaps best known for its cutting edge eye treatment, Eylea, which can help treat serious conditions in the eye, such as macular degeneration and macular edema. Regeneron has been growing rapidly, expanding vastly since the 1990s. During the pandemic, Regeneron became well known for its coronavirus cocktail, an antibody therapy that has shown impressive results at preventing COVID-19.
Although there are certainly bigger names in the COVID-19 game, Regeneron continues to show consistent, strong growth and has a top-notch product line. The company’s stock also jumped a bit after their first-quarter earnings. Many financial experts believe investing now could lead to large returns down the road — just keep in mind that holding onto this stock long-term is expected to yield the best results.
7. Merck (NYSE:MRK)
Merck is another contender worth considering when adding biotech companies to your portfolio. That’s because this company has one of the top-selling pharmaceutical drugs on the market, Keytruda. Keytruda is used primarily to treat skin cancer (melanoma) but has recently been used for different types of cancer (such as breast and colon) since it boosts immunity. Although Merck is still fighting to get this drug approved for additional cancers, some predict this top-seller will become the number one selling drug within the next two years.
Since Keytruda is patented through 2028, rising to the top-selling drug spot could lead to tremendous growth and profitability for Merck. Of course, this biotech company also has other innovative drugs and anesthetics on its roster and has a robust selection of animal health pharmaceuticals. With Merck expected top sales to continue growing throughout the rest of 2021, it’s certainly worth considering investing in this company this year.
8. Vertex Pharmaceuticals (NASDAQ:VRTX)
Vertex Pharmaceuticals is the owner of the only FDA-approved treatment for cystic fibrosis, Trikafta. Approved in 2019, this drug is the main reason for Vertex’s success, though the company has much more in store. Vertex is working on an exciting treatment for sickle cell disease and transfusion-dependent thalassemia, which can help patients reduce the number of blood transfusions previously needed to survive.
On the downside, this company’s first drug trials with a treatment for alpha-1 antitrypsin (AAT) received negative feedback when it was found that some candidates showed serious signs of liver disease after taking the drug. While that particular drug was shelved, a newer version (VX-864) is currently being tested, which some investors remain skeptical toward.
Despite mixed reviews on its other drugs, Vertex remains the number one name in cystic fibrosis treatment, so profits are still expected to grow this year. While Vertex is a bit riskier than other biotech companies, it could also offer major wins for investors.
9. Amgen (NASDAQ:AMGN)
The pandemic has changed the way many of us live our lives, which also includes going to the doctor. While you may have been scheduling regular appointments pre-pandemic, many of us have been hesitant to return to our old routines. As a result, drug sales have declined for some companies, Amgen included. Amgen reported rather unimpressive Q1 earnings earlier this year, which left many wondering whether it was worth investing in this biotech company.
Although Amgen continues to build out its research for new therapeutics, the company’s drug performance has dropped year over year, which could be concerning. However, Amgen is one of the world’s leading biotech companies and the right development could cause stocks to trend upward. While this stock could be a good buy, be sure to pay attention to Amgen’s latest announcements and financial forecasts before pulling the trigger.
10. BioNTech (NASDAQ:BNTX)
BioNTech partnered with Pfizer to help release its coronavirus vaccine in most countries, and as a result, saw a rise in its stock. In fact, BioNTech was the first to develop a preventative vaccine for COVID-19. The company beat its Q4 projections in 2020 ($396 million posted, $274 million projected) and is expected to continue to perform strongly throughout the rest of this year.
Although the COVID-19 vaccine’s profitability will likely taper out in the near future, BioNTech has other mRNA drugs being developed and tested now, particularly for combating cancer. This company seems particularly well poised for success and it feels like we’ve only seen a fraction of the innovations they’ll produce over the next several decades. I recommend investing before their stock becomes too expensive.
Other biotech companies to consider
Of course, the above is just a sliver of the biotech companies on the market today, producing therapeutic drugs designed to help prevent or treat serious diseases. Other top contenders worth researching as you grow your portfolio include:
- Exellius (NASDAQ:EXEL) - currently developing a range of cancer treatments
- Axsome Therapeutics (NASDAQ: AXSM) - focusing on neuroscience and developing drugs to fight Alzheimer's and depression
- Bristol Myers Squibb (NYSE:BMY) - a top contender in the cancer treatment space
- Alkermes (NASDAQ: ALKS) - creates drugs for schizophrenia and alcohol/drug addiction treatment
- Provention Bio (NASDAQ:PRVB) - working on diabetes treatment and prevention drugs
The bottom line
Investing in biotechnology is a smart move, particularly after the way these companies have helped pull global communities out of the past year’s pandemic. When choosing a biotech company to invest in, it’s important to look beyond COVID-19 and review the company’s additional product offerings and current clinical trials. The above ten companies are a sampling of some of the strongest and best-performing biotech companies, but remember, no investment comes without some level of risk. Investing strategically and tapping into the right biotech company now could have tremendous impacts on your wallet in the future.