The pharmaceutical industry is made of companies that research, develop, make, and sell drugs and treatments used to treat or eradicate diseases, and vaccinate people. This includes some of the largest and best-known companies in the world, such as Pfizer Inc. (PFE), Merck & Co. Inc. (MRK), and AbbVie Inc. (ABBV). A number of pharmaceutical companies, including Pfizer, have seen a surge in their sales after winning approval from U.S. and foreign governments for vaccines aimed at preventing the COVID-19 virus.
Over the last 12 months, pharmaceutical stocks, based on the iShares U.S. Pharmaceuticals ETF (IHE), have lagged behind the overall market. IHE's total return over the period was 17.2% compared to the Russell 1000's 34.8% return. The data is current as of June 8, 2021.
Here are the top 3 pharmaceutical stocks with the best value, the fastest growth, and the most momentum.
These are the pharmaceutical stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Pharmaceutical Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Emergent Biosolutions Inc. (EBS)||63.91||3.4||8.9|
|Ironwood Pharmaceuticals, Inc. (IRWD)||11.46||1.9||12.9|
- Emergent BioSolutions Inc.: Emergent BioSolutions sells products such as anthrax vaccines, NARCAN Nasal Spray (opioid overdose), and ACAM2000 (smallpox vaccine). During the pandemic, Emergent partnered with the government to produce COVID-19 vaccines. The company reported a sharp increase in revenue in Q1 2021, helping it to swing from a loss a year ago to a profit in the current quarter.
- Sanofi SA.: Sanofi, based in France, owns pharmaceutical, vaccine, and consumer healthcare businesses. Its products treat a wide range of diseases, including rheumatoid arthritis, cancer, diabetes, cardiovascular diseases, and rare blood disorders.
- Ironwood Pharmaceuticals Inc.: Ironwood Pharmaceuticals develops drugs for gastrointestinal and cardiovascular diseases. In March, chief executive officer (CEO) Mark Mallon stepped down and was replaced by Thomas McCourt.
These are the top pharmaceutical stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Pharmaceutical Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Redhill Biopharma Ltd. (RDHL)||7.31||0.3||N/A (See Company Description)||1,850|
|Dynavax Technologies Corp.(DVAX)||9.13||1.0||N/A (See Company Description)||663.2|
|IM Cannabis Corp. (IMCC)||5.70||0.3||N/A (See Company Description)||592.1|
- Redhill Biopharma Ltd.: Redhill Biopharma is a specialty biopharmaceutical company. It develops products primarily used to treat diseases and medical conditions for gastrointenstines and for infections. EPS was negative for the most recent quarter so it does not apply to the EPS growth part of the table above.
- Dynavax Technologies Corp.: Dynavax Technologies is a biopharmaceutical company that makes novel vaccines. It is best known for HEPLISAV-B, a Hepatitis-B vaccine for prevention of Hepatitis-B in adults eight years or older. In Q1 2021, revenue was more than seven times higher than the same quarter a year earlier, helping EPS to move from negative to positive.
- IM Cannabis Corp.: IM Cannabis is an Israel-based company that develops medical cannabis strains and oils for consumers. It acquired Trichome Financial, a provider of capital to cannabis companies, last year to enter the Canadian market. Its EPS was was negative for the most recent quarter so it is not shown in the EPS growth section of the table above.
These are the pharmaceutical stocks that had the highest total return over the last 12 months.
|Pharmaceutical Stocks with the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|22nd Century Group Inc. (XXII)||5.00||$762.2||421|
|Zomedica Corp. (ZOM)||0.97||945.6||386.7|
|MariMed Inc. (MRMD)||1.03||332.4||368.2|
|iShares U.S. Pharmaceuticals ETF (IHE)||N/A||N/A||17.2|
- 22nd Century Group Inc.: 22nd Century Group is a plant biotechnology company. It uses genetic engineering and plant breeding to alter the nicotine content in tobacco plants and cannabinoids in cannabis plants. In Q1 2021, the company reported negative earnings as sales fell.
- Zomedica Corp.: Zomedica is a veterinary diagnostic company focused on producing products to treat animals. It released its first product, Truforma, which is a diagnostics platform designed to detect thyroid disorders in dogs and cats in March this year. In Q1 2021, Zomedica reported a net loss of $4 million on revenue of $14 million.
- Marimed Inc.: Marimed is a cannabis and hemp company that operates medical dispensaries in multiple states. In Q1 2021, revenue soared, helping the company to post net income of $4.3 million compared to a loss a year earlier.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
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Emergent Biosolutions. Financial Results Q1 2021. Accessed June 8, 2021.
Businesswire. Ironwood Announces Business Updates. Accessed June 8, 2021.
Biospace. In "pursuit of passions", Ironwood CEO will step down. Accessed June 8, 2021.
FDA. HEPLISAV-B. Accessed June 10, 2021.
DYNAVAX. Dynavax Announces First Quarter Results. Accessed June 10, 2021.
Torys. IM Cannabis Acquires Trichome Financial. Accessed June 10, 2021.
22nd Century Group, Inc. New Investor/Latest Resources. Accessed June 10, 2021.
Globe Newswire. Zomedica Announces Launch of First Commercial Sale of Truforma Platform. Accessed June 10,2021.
Globe Newswire. Zomedica Announces First Quarter 2021 Results. Accessed June 10, 2021.
Benzinga, Marimed Posts Record Q1 2021 Figures, Accessed June 10, 2021