We recently compiled a list of the 10 Best Pharma Stocks To Buy Right Now. In this article, we are going to take a look at where Amgen Inc. (NASDAQ:AMGN) stands against the other pharma stocks.
Healthcare takes the concept of ‘defensive’ further than almost any industry, encompassing many companies that provide patient care, engage in the research and development of new treatments, and design, manufacture, and market diagnostic equipment and tests. Breakthroughs in medical technology, pharmaceuticals, and treatment methods have transformed patient outcomes, with pharmaceutical companies, in particular, attracting significant attention as the demand for rapid results has increased. A report from Grand View Research estimates that the global pharmaceutical manufacturing market was valued at around $516.48 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 7.63% from 2023 to 2030.
Today, the biopharma sector boasts its largest and most diverse clinical pipeline to date—a result of decades of pioneering research. The number of unique drugs in development has nearly doubled, growing from 3,200 in 2012 to 6,100 in 2022. That said, only 14% of drugs in clinical trials make it to FDA approval, according to Research from MIT, pushing the average cost of developing a single drug to about $1 billion. AI could be the game-changer here. Generative AI, for example, lets researchers explore way more potential compounds than traditional methods can while helping spot disease patterns in massive data sets to find the best drug combinations. Moreover, PwC predicts that AI-driven automation and analytics could slash process timelines by 60–70% and reduce operational costs by over 30%.
See also: 10 Most Promising Gene Editing Stocks to Buy According to Hedge Funds.
Similarly, interest in weight-loss drugs like Ozempic and Wegovy has fueled huge growth in the industry. A recent study published in the scientific journal Addiction indicates that GLP-1 drugs could cut opioid and alcohol addiction rates by up to half. These drugs are also being tested for Alzheimer’s and other conditions commonly linked to obesity. For pharmaceutical companies aiming to lead in areas like cardiovascular and renal health, developing GLP-1s is becoming essential. The focus has shifted beyond competing with the top dogs in the anti-obesity market, which is projected to reach $130 billion by 2030. As the potential applications of GLP-1s grow, so does the opportunity for new players to enter the field. Swiss company Roche, for instance, rejoined the race for a weight-loss pill last year with its acquisition of California-based Carmot Therapeutics for up to $3.1 billion. The company is looking to “fast-track” its anti-obesity treatments, aiming to capture a chunk of the weight-loss market and restore confidence in its pipeline.
Headwinds in Pharmaceuticals
At first glance, the pharma industry might look like it’s thriving. But, like any industry, it faces its own set of challenges. Both biotech and pharmaceuticals faced a steep 48.6% decline in funding last year compared to 2021. The IPO market also dropped sharply in 2022, with proceeds plummeting amid market instability and volatility. The surge in drug-developer IPOs in 2020 and 2021, which raised approximately $46.5 billion—surpassing the total from the previous eight years combined—left many general investors wary. The biotech industry’s high-risk, high-reward nature, coupled with macroeconomic and geopolitical risks affecting broader markets, has put upcoming IPOs under close scrutiny. That said, drug developers have managed to raise $2 billion through IPOs this year as of September 3, reflecting a 24% increase compared to the same period in 2023. Though nearly two-thirds of these funds were secured in the initial two months amid a surge of new listings, according to BNN Bloomberg. However, with less than $800 million raised in the following six months, drug developers’ share of U.S. IPO proceeds has dropped from 17% in February to 6.5%.
In his welcome remarks at the October 7 conference, Tim Hunt, CEO of the Alliance for Regenerative Medicine (ARM), highlighted a rise in investment in cell and gene therapies in 2024. He noted that 13 of the world’s 15 largest pharma companies by market capitalization now have an “active presence” in this field. With numerous product patents set to expire, major pharmaceutical companies are increasingly looking to cell and gene therapies to bridge potential revenue gaps. Despite this interest, the number of cell and gene therapy deals in the pharma sector dropped by 38% in Q2 2024 compared to the same period in 2023, and there has been a decline in related patent applications. That said, the industry remains compelling and is one that potential investors shouldn’t ignore.
Our Methodology
We began by examining several U.S. pharmaceutical ETFs to identify stocks with the highest weightings. From these selections, we ranked each stock based on the total number of hedge fund holders as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
A pharmacist filling a prescription for a complex drug developed by the company.
Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 69
Amgen Inc. (NASDAQ:AMGN) is a global biopharmaceutical leader specializing in human therapeutics across areas like oncology, hematology, inflammation, bone health, and cardiovascular diseases.
Amgen Inc. (NASDAQ:AMGN) reported $8.5 billion in revenue for Q3 2024, marking a 23% jump from $6.9 billion in the same period last year. This growth was fueled by a 24% rise in product sales, with ten key products achieving double-digit sales increases, including Repatha, Tezspire, Evenity, Tavneos, and Blincyto. Additionally, the company’s innovative oncology portfolio grew by 17%, while the rare disease segment saw a 21% year-over-year increase, generating $1.2 billion in Q3 revenue.
On October 16, Goldman Sachs reaffirmed its Conviction Buy rating on Amgen Inc. (NASDAQ:AMGN) with a price target of $369. The endorsement reflects Amgen’s progress amid a pivotal year, especially with Phase 2 obesity data for MariTide expected by year-end 2024. Positive results could unlock a massive obesity treatment market, projected to reach $130 billion by 2030. Goldman’s analysis highlighted that the upcoming data will be crucial for validating Amgen’s unique strategy of combining a GLP1-R agonist with a GIPR antagonist—potentially positioning MariTide as a strong competitor to existing and emerging treatments like Wegovy and Zepbound.
By Q2 2024, 69 hedge funds tracked by Insider Monkey held stakes in Amgen Inc. (NASDAQ:AMGN).
PGIM Jennison Health Sciences Fund stated the following regarding Amgen Inc. (NASDAQ:AMGN) in its Q2 2024 investor letter:
“Amgen Inc. (NASDAQ:AMGN) is a large cap global biotech company with a diverse portfolio of marketed and pipeline products. Amgen’s discovery pipeline had led the company to broaden its focus from oncology, immunology, and renal disease to include musculoskeletal, cardiovascular, and neurologic conditions. In addition, Amgen has turned its expertise in antibody manufacturing into a leading position in the development of biosimilars of competitor drugs. Most recently, Amgen shares advanced in 2Q following its announcement that its novel injectable GLP-1 agonist / GIPR antagonist, MariTide, for obesity showed promising interim Phase 2 data and has shown enough promise to warrant advancement into pivotal trials as soon as late 2024. While Eli Lilly and Novo Nordisk will remain the market leaders in the diabetes / obesity space, we think there is room for Amgen to carve out a meaningful share of the market with its antibody-peptide conjugate approach that could enable monthly or better dosing for MariTide.”
Overall AMGN ranks 7th on our list of the best pharma stocks to buy. While we acknowledge the potential of AMGN as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMGN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.