Biotech and Medical Concept Stocks Investment Guide: Mining Opportunities in the Global Pharmaceutical Market

Why Should You Pay Attention to Pharmaceutical and Biotech Stocks?

The healthcare industry is one of the most resilient investment sectors today. Unlike electronics, which fluctuate with economic cycles, the pharmaceutical industry has inherent defensive characteristics—people need medical treatment regardless of economic conditions. As the global population ages rapidly, new drugs are continuously launched, and telemedicine flourishes, biotech and healthcare concept stocks are becoming an increasing focus for investors.

According to market data, the US biopharmaceutical market is the largest and most active in the world. It is projected to reach $445 billion by 2027, with a compound annual growth rate (CAGR) of 8.5%. This indicates that in the coming years, biotech and healthcare concept stocks still have significant growth potential.

Why Can Pharmaceutical and Biotech Stocks Deliver High Returns?

Core Logic: Future Expectations Drive Stock Prices

Traditional companies’ stock prices are based on current profitability, but biotech and healthcare stocks are different. Many biotech firms are in R&D stages, lacking stable cash flow, yet they attract intense investor interest. The secret is—once a new drug passes clinical trials and gains FDA approval, the stock price often begins to soar.

A notable example in Taiwan is TTY Biopharm. In 2022, the year of the stock market crash, its stock price doubled because its drug received orphan drug designation in the US. Despite the company’s EPS being negative 2.93 NT dollars at that time, investors kept buying. By October 2023, after completing Phase 3 clinical trials globally, the stock price surged to a record high of 388 NT dollars. This clearly shows that investors value the promising future earnings potential.

“Blockbuster Drugs” Drive Continuous Growth

In the pharmaceutical industry, there is a term called “blockbuster”—referring to a single drug with annual sales exceeding $1 billion. Successful large pharmaceutical companies are willing to invest 50-60% of their revenue into R&D, continuously developing new drugs. Although this may temporarily lower EPS, large institutional investors tend to raise their target prices for these companies. The reason is simple: future innovative products will keep coming. That’s why TSMC’s P/E ratio can be much higher than UMC’s—because TSMC commits to continuous innovation, while UMC plans to rely on old strengths.

Risks and Challenges of Biotech and Healthcare Stocks

Investing in these stocks requires mental preparedness, as volatility is normal. Stock prices can be affected by various uncertainties:

• Clinical trial results: failure can be fatal
• Competitor moves: new product launches can instantly change the landscape
• Policy and regulatory changes: regulatory adjustments directly impact profits
• Patent disputes: patent expirations mean generic competition
• Government and insurance interventions: policies may limit drug pricing

For example, in Taiwan, the National Health Insurance system keeps drug prices low each year, leading many pharmaceutical companies to hesitate to introduce their best new drugs into Taiwan. In contrast, the US, driven by capitalism, allows higher drug prices paid by insurance companies, making it the most suitable market for pharmaceutical and biotech stocks.

How to Assess the Value of Pharmaceutical and Biotech Stocks?

FDA Approval Is the Gold Standard

Whether in Taiwan or the US, the most critical factor is FDA approval. The FDA has the strictest drug regulation standards globally. Once a drug is approved by the FDA, approval in other countries often follows quickly. This is why US biotech and pharmaceutical stocks are so highly regarded.

PSR Valuation Method Is Suitable for R&D Companies

For biotech firms that have not yet turned a profit, investors often use PSR (Price-to-Sales Ratio) to evaluate their value, rather than traditional P/E ratios. This method is more appropriate for companies with significant potential but not yet substantial revenue.

Why Is the US the Best Market for Pharmaceuticals and Biotech?

The US pharmaceutical market has unique advantages:

Robust Industry Ecosystem — Nearly one million biotech and healthcare professionals work across R&D, manufacturing, and sales. The strong employment prospects attract top talent worldwide.

Capital Market Support — US venture capital and large funds are eager to invest in the healthcare industry, creating a healthy cycle. Companies can easily raise funds for R&D and acquisitions.

Scale and Competitiveness — The US market is large and highly competitive, fostering many top global companies. While Taiwan and Asia are developing, their scale, innovation, and investment returns still lag behind US stocks.

Selected US Pharmaceutical and Biotech Stocks

The US healthcare market is divided into four main sectors: Pharmaceuticals, Biotechnology, Medical Devices, and Healthcare Services. Here are the leading companies in each:

Major Pharmaceutical Giants

Eli Lilly (LLY) — Valued at $842.05 billion in 2024, ranking 10th globally, and now the largest pharmaceutical company by market cap. Its drug market is mainly in North America (about 60%), with obesity drugs expected to grow steadily in the coming years. A must-watch biotech stock.

Pfizer (PFE) — Gained fame during the pandemic for its COVID-19 oral antiviral. Its stock has shown steady growth, and during major US stock market corrections, it has been an excellent entry point for long-term investors.

Merck (MRK) — Its flagship product, Keytruda, is one of the best-selling cancer treatments worldwide. The stock has long-term upward momentum, pays generous dividends, and is suitable for positioning during market downturns.

Diversified Healthcare Companies

Johnson & Johnson (JNJ) — Similar to Pfizer but with less stock price volatility and more diversified business. Known as the “Steady King” among biotech stocks, ideal for dollar-cost averaging or long-term holding. Its long-term upward trend and moderate volatility also make it suitable for margin trading to amplify gains.

AbbVie (ABBV) — Focuses on immunology, oncology, and virology drugs. Its flagship product Humira was FDA-approved in 2002 and is a first-line treatment for rheumatoid arthritis. The drug’s patent is expiring, but the company holds hundreds of patents and has licensing agreements with giants like Pfizer and Amgen since 2018. In 2023, it began selling biosimilars in the US and collecting licensing fees. Continuous R&D investment makes it a candidate for consideration during dips.

UnitedHealth (UNH) — As a healthcare service leader, benefits from aging US population and increasing medical needs. Revenue, profits, and stock price have been steadily growing, with stable dividends.

All these companies have strong competitiveness, solid financials, good cash flow, and generous dividends.

Taiwanese Pharmaceutical and Biotech Stocks Also Worth Watching

SynCore Biotechnology (1720)

A diversified pharmaceutical company involved in Western medicine, health supplements, medical devices, and cosmetics. Revenue and net income have grown slowly in recent years, with assets steadily increasing and stable debt levels. Although growth momentum is modest, its stable dividends make it popular among Taiwanese dividend investors.

Kenda Biotech (1783)

Engaged in the production and sales of biopharmaceuticals, medical devices, skincare products, and specialty chemicals. Business is divided into consumer goods and biomedicine. Profits turned positive in 2017, with stable fundamentals in recent years, low and steady debt levels, making it worth continued attention.

Investment Advice for Pharmaceutical and Biotech Stocks

Investing in biotech and healthcare stocks requires professional knowledge. Compared to Taiwan’s electronics-dominated market structure, US pharmaceutical stocks offer greater imagination and more high-quality investment opportunities. Even if Taiwan produces excellent biotech companies, their stock performance often does not match that of US pharma stocks.

This reflects both differences in capital markets and the level of technological and investor professionalism. As global healthcare demand continues to grow, the long-term investment value of biotech and healthcare concept stocks should not be overlooked. For investors interested in this field, it is recommended to focus more on the US pharmaceutical industry development. Globally, US pharma stocks remain the most attractive investment options today.

Investment Tip: Although pharmaceutical stocks have broad prospects, they also carry volatility and uncertainty. Investors should tailor their strategies to their risk tolerance, diversify their investments, and avoid over-concentration or chasing high prices impulsively.