In this article, we discuss the 10 best pharma stocks to buy now. If you want to see more stocks in this selection, check out the 5 Best Pharma Stocks To Buy Now.
With a compound annual growth rate (CAGR) of 9.1%, the global pharmaceuticals industry is projected to expand to $1587.1 billion in 2022 from $1454.7 billion in 2021. In 2026, the pharmaceutical market is anticipated to reach $2135.2 billion at a CAGR of 7.7%. The industry is anticipating a strong growth outlook moving forward as thousands of drugs and therapeutics are in the later stages of research and near approval.
The US represents a 45% share of the global pharmaceutical market, and the Affordable Care Act (Obamacare) being upheld by the Supreme Court further enhances the sector’s prospects for future expansion. The prevalence of chronic illnesses such as cancer and congestive heart failure is rising quickly on a global scale. The World Health Organization (WHO) estimates that some 133 million Americans, or 40% of the nation’s population, are affected by such diseases as of 2022. This is anticipated to produce a sizable patient population with a variety of chronic illnesses, as well as individuals receiving therapy in long-term care facilities and at home. Additionally, the Rural Health Information Hub estimates that there are presently over 46 million adults in the US who are 65 years of age or older; that figure is projected to increase to approximately 90 million by 2050. During the projected period, these variables are presumably going to support the growth of the pharmaceutical industry in the United States.
The pharmaceutical industry is undergoing an evolution as new trends are shaping the industry. One of the major trends being followed by the best pharmaceutical stocks is the use of artificial intelligence (AI) to expedite the process of drug discovery and development. Another key trend is the emergence of precision medicine which is focused on specific patient diagnoses. Precision medicines ensure a higher level of effectiveness and lower the chance of adverse reactions. It must be noted that around 450 medications had to be withdrawn in the past 25 years due to adverse reactions, which is why precision medicine is expected to be a move in the right direction for the pharmaceutical industry. Furthermore, the demand for generic drugs and over-the-counter (OTC) medications is expected to rise as the population ages in many industrialized nations. Particularly, the long-term need for medications for chronic diseases will increase, presenting a growth opportunity for some of the best pharmaceutical stocks such as Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Cardinal Health, Inc. (NYSE:CAH).
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Our Methodology
To shortlist the best pharmaceutical stocks, we have analyzed their business fundamentals and growth prospects. These companies have strong drug pipelines and many therapeutics that are near the approval stage. The new drugs are expected to give a boost to these companies’ financial strength and yield strong returns for investors in the long run. Furthermore, we have discussed the analysts’ outlook on these stocks’ growth outlook. The stocks have been ranked according to the number of hedge funds holding a stake in them as of Q2 2022.
10 Best Pharma Stocks to Buy Now
10. InMed Pharmaceuticals Inc. (NASDAQ:INM)
Number of Hedge Fund Holders: 4
InMed Pharmaceuticals Inc. (NASDAQ:INM) is a Vancouver, Canada-based clinical-stage developer and manufacturer of rare cannabinoid-based pharmaceutical drugs.
The cannabinoid market is considered an expanding segment in the pharmaceutical industry. According to a report issued by Grand View Research, the size of the cannabinoids retail market is expected to rise to $26 billion by 2028. InMed Pharmaceuticals Inc. (NASDAQ:INM) is working on maintaining its position as one of the best pharmaceutical stocks in this segment.
InMed Pharmaceuticals Inc. (NASDAQ:INM) is bringing back its focus on the pharmaceutical side of the business and looking to lower its exposure in the health and wellness (H&W) segment. The company is anticipating the achievement of major milestones from the pharmaceutical business in the coming quarters and looking to complete the preclinical work on its glaucoma program next year before starting human trials in 2024. InMed Pharmaceuticals Inc. (NASDAQ:INM) is leading the Phase-II trial of the investigational drug INM-755 cannabinol (CBN) cream for treating patients suffering from epidermolysis bullosa (EB). The company is conducting Phase II trials across eight clinical trial facilities.
9. aTyr Pharma, Inc. (NASDAQ:LIFE)
Number of Hedge Fund Holders: 8
aTyr Pharma, Inc. (NASDAQ:LIFE) is a San Diego, California-based biotech company working on treating pulmonary sarcoidosis by bringing into use the extracellular functionality of tRNA synthetases.
In a research note issued on September 27, Edward Tenthoff at Piper Sandler maintained an Overweight rating on aTyr Pharma, Inc. (NASDAQ:LIFE) stock with a target price of $14. The target price reflects an upside of 449% from the closing price as of October 21, making it a potential multi-bagger stock. The analyst noted that aTyr Pharma, Inc. (NASDAQ:LIFE) started the Phase-III EFZO-FIT trial and gave the first monthly infusion dose of either 3mg/kg or 5mg/kg of efzofitimod or placebo to 264 patients with pulmonary sarcoidosis. Efzofitimod has been granted a Fast Track Designation by the US Food and Drug Administration (FDA) for the treatment of pulmonary sarcoidosis.
Furthermore, aTyr Pharma, Inc. (NASDAQ:LIFE) is also working on filing an investigational new drug (IND) application to start the Phase-I trial of ATYR2810, which intends to address the growth of lung cancer tumors. The company’s strong drug pipeline reflects that it has solid growth prospects, meriting its inclusion in our list of the 10 best pharmaceutical stocks to buy now.
8. Grifols, S.A. (NASDAQ:GRFS)
Number of Hedge Fund Holders: 12
Grifols, S.A. (NASDAQ:GRFS) is a Barcelona, Spain-based manufacturer of chemicals and pharmaceuticals that is considered a leader in plasma-derived therapeutics with a presence in over 110 countries.
Grifols, S.A. (NASDAQ:GRFS) is working on improving the financial strength of the company by lowering debt and enhancing its ability to generate strong cash flows. The company anticipates the revenue during the second half of 2022 to increase by a double-digit percentage from the same period last year as the plasma collection has surpassed the pre-pandemic levels. The size of the plasma-controlled medicine market is expected to compound annually at an average rate of 6.8% to $53.14 billion by 2028.
In September, Grifols, S.A. (NASDAQ:GRFS) also closed a deal with the Canadian national blood authority to increase access to immunoglobulin (Ig) medications and plasma-protein therapy in the country. In accordance with the 15-year agreement, which also contains the potential for extensions, the company will partner with Canadian Blood Services to boost blood plasma sourcing domestically. Grifols, S.A. (NASDAQ:GRFS) has a strong growth outlook, justifying its inclusion in the list of the best pharmaceutical stocks to buy now.
Millennium Management raised its stake in Grifols, S.A. (NASDAQ:GRFS) by 43% during Q2 2022.
7. Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX)
Number of Hedge Fund Holders: 15
Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) is a Cambridge, Massachusetts-based company that is focused on treating neurodegenerative diseases.
In a research note issued on October 3, Neena Bitritto-Garg at Citi increased the target price for Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) from $48 to $50 and maintained a Buy rating on the stock. The analyst made changes to her financial model following the full approval of Relyvrio from the FDA for treating amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease. Garg gave positive commentary on the $158,000 per year net price for the treatment, which is 7% lower than the net annual price of $170,000 for competitor Edaravone. The analyst believes that the attractive pricing will result in positive feedback from the patients and advocacy groups, bringing the drug into the limelight. This will translate into higher demand and sales.
Experts believe that Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) stock is trading at an attractive valuation due to the overhang related to financing and the uncertainty surrounding the PHOENIX drug trials. This provides a good opportunity for investors to take a long position in the stock.
6. Sarepta Therapeutics, Inc. (NASDAQ:SRPT)
Number of Hedge Fund Holders: 41
Sarepta Therapeutics, Inc. (NASDAQ:SRPT) is a Cambridge, Massachusetts-based biotech corporation focused on developing precision medicines to treat rare diseases through gene editing and therapy and other techniques.
Matthew Harrison at Morgan Stanley added Sarepta Therapeutics, Inc. (NASDAQ:SRPT) stock to the ‘Catalyst Driven Idea’ on September 7 after the company revealed its plans to file accelerated approval for SRP-9001 in treating Duchenne muscular dystrophy (DMD) for ambulatory patients. Sarepta Therapeutics, Inc. (NASDAQ:SRPT) made the Biologics License Application (BLA) with the FDA on September 29 and anticipates a positive response by the end of 2022. During clinical trials, SRP-9001 has shown positive results even after one, two, and four years of treatment, along with a constant safety profile.
Harrison anticipates a 45% chance of approval by the FDA that could drive up the share price of Sarepta Therapeutics, Inc. (NASDAQ:SRPT) by 28% to 38%. Experts believe that the approval of a priority review could take the share price to as high as $150.
As of Q2 2022, Sarepta Therapeutics, Inc. (NASDAQ:SRPT) was held by 41 hedge funds.
Besides Sarepta Therapeutics, Inc. (NASDAQ:SRPT), stocks such as Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Cardinal Health, Inc. (NYSE:CAH) are also amongst some of the best pharmaceutical stocks in the market.
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Disclose. None. 10 Best Pharma Stocks to Buy Now is originally published on Insider Monkey