The pharmaceutical industry is made up of companies that research, develop, manufacture and sell drugs and treatments used to treat or eradicate disease and to vaccinate people. This includes some of the largest and best-known companies in the world, such as Pfizer Inc., Merck & Co. and AbbVie Inc. A number of pharmaceutical companies have seen a surge in sales after US and other government approvals for vaccines to protect people from the COVID-19 virus.
Over the past 12 months, pharmaceutical stocks, based on the iShares US Pharmaceuticals ETF (IHE), have outperformed the overall market. IHE’s total return for the period was -2.6%, compared to the S&P 500’s total return of -9.8%. These market performance figures and all statistics in the tables below are as of September 14, 2022.
Here are the top three pharmaceutical stocks in each category: best value, fastest growth, and most momentum.
These are the pharmaceutical stocks with the lowest price-earnings ratio over 12 months. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you are paying less for every dollar of profit generated.
|Best Value Pharmaceutical Stocks|
|Price ($)||Market Capitalization ($B)||12 month ongoing P/E ratio|
|Embecta Corp. (EMBC)||32.50||1.9||5.5|
|Organogenesis Holdings Inc. (ORGO)||3.55||0.5||6.4|
|Organon & Co. (OGN)||28.62||7.3||6.6|
- Embecta Corp.: Embecta is a diabetes care company that makes medical devices. The company provides pen needles, syringes and safety equipment to help people manage diabetes. Embecta has only recently become an independent publicly traded company. On April 1, the company announced that it had completed its spin-off of Becton, Dickinson & Co., also known as BD.
- Organogenesis Holdings Inc.: Organogenesis Holdings is a holding company that, through subsidiaries, develops and manufactures products used in advanced wound care and in the surgical and sports medicine industries. On August 15, the company announced that it had received approval from the US Food and Drug Administration (FDA) for PuraPly MZ. PuraPly MZ is a brand extension of the pre-existing PuraPly brand and consists of a powdered product used to address complex surgical wounds.
- Organon & Co.: Organon is a global women’s health care company that develops and manufactures pharmaceuticals and other products in a wide range of areas, including reproductive health, heart disease, immunology, oncology and dermatology.
These are the top pharmaceutical stocks, ranked by a growth model that rates companies based on a 50/50 weighting of their most recent quarterly growth rate of YOY percentage and their most recent quarterly growth rate of YOY earnings per share (EPS). Both sales and profits are critical factors for a company’s success. Therefore, ranking companies by only one growth metric makes a ranking susceptible to that quarter’s accounting anomalies (such as changes in tax laws or restructuring costs) that may make one number or the other unrepresentative of the company in general. Companies with quarterly earnings per share or revenue growth of more than 2500% were excluded as outliers.
|Fastest Growing Pharmaceutical Stocks|
|Price ($)||Market Capitalization ($B)||EPS growth (%)||Revenue growth (%)|
|SNDL Inc. (SNDL)||2.80||0.7||N/A (see company description)||2.250|
|Intra-cellular Therapies Inc. (ITCI)||50.15||4.7||N/A (see company description)||189.8|
|Merck & Co. (MRK)||86.95||220.3||154.1||28.0|
- SNDL Inc.: SNDL is a Canadian-based producer of medicinal and adult cannabis. The company operates growing and processing facilities, retail stores and also sells alcoholic beverages. The company announced on August 22 that it was ending cannabis product manufacturer Valens Co. (VLNS) for a total consideration of approximately $138 million. The deal is expected to close in January 2023. SNDL had negative EPS for the most recent quarter, so it doesn’t have an EPS growth figure in the table above.
- Intra-Cellular Therapies Inc.: Intra-Cellular Therapies is a biopharmaceutical company that develops and markets treatments for people with complex psychiatric and neurological disorders. The company reported earnings for the second quarter of 2022 on August 9. Net losses increased as YOY sales nearly tripled. Intra-Cellular said “strong uptake in bipolar depression” contributed to its revenue growth. The company had negative EPS for the most recent quarter, so it doesn’t have an EPS growth figure in the table above.
- Merck & Co.: Merck & Co. is a global healthcare company providing prescription drugs, biologic therapies, vaccines and animal health products.
These are the three pharmaceutical stocks with the highest total returns over the past 12 months.
|Pharmaceutical stocks with the most momentum|
|Price ($)||Market Capitalization ($B)||12 months sequential total return (%)|
|Lantheus Holdings Inc. (LNTH)||86.05||5.9||250.1|
|SIGA Technologies Inc. (SIGA)||13.20||1.0||113.8|
|Amphastar Pharmaceuticals Inc. (AMPH)||29.62||1.5||64.7|
|iShares US Pharmaceuticals ETF (IHE)||N/A||N/A||-2.6|
- Lantheus Holdings Inc.: Lantheus is a holding company that operates through subsidiaries including Lantheus Medical Imaging and Progenics Pharmaceuticals. The company provides diagnostics, targeted therapies and artificial intelligence solutions used to detect and evaluate a variety of diseases and conditions.
- SIGA Technologies Inc.: SIGA Technologies is a pharmaceutical company in the commercial phase. It focuses on health and safety, including developing countermeasures for biological and chemical attacks, as well as vaccines and therapies for emerging infectious diseases.
- Amphastar Pharmaceuticals Inc.: Amphastar Pharmaceuticals is a biopharmaceutical company that develops, manufactures and markets generic and injectable, inhalation and intranasal products. It also sells an insulin active pharmaceutical ingredient. In mid-August, Amphastar reported that its new drug application for epinephrine prefilled syringes had been approved by the FDA. Epinephrine injection is used in certain patients who are experiencing septic shock.
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