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 the performance of the overall market. IHE’s total return over the period was 19.3% compared to the Russell 1000’s total return of 37.1%. These market performance figures and all statistics in the tables below are as of Sept. 10, 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|
|Ironwood Pharmaceuticals Inc. (IRWD)||12.20||2.0||3.9|
|Organon & Co. (OGN)||33.88||8.6||4.1|
|Collegium Pharmaceutical Inc. (COLL)||19.70||0.7||7.2|
- Ironwood Pharmaceuticals Inc.: Ironwood Pharmaceuticals develops and manufactures drugs used to treat gastrointestinal and cardiovascular diseases.
- Organon & Co.: Organon is a global women’s healthcare company that develops and produces medicines and other products across a range of areas, including reproductive health, heart disease, dermatology, allergies, and asthma. The company announced in mid-June that it has completed its acquisition of Alydia Health, a commercial-stage medical device company specializing in the prevention of maternal morbidity and mortality caused by postpartum hemorrhage or abnormal postpartum uterine bleeding. Organon first agreed to acquire Alydia Health in March 2021 for $240 million.
- Collegium Pharmaceutical Inc.: Collegium Pharmaceutical is a pharmaceutical company specializing in pain management. It develops medications to treat acute and chronic pain. The company announced in mid-August that its board of directors authorized the repurchase of up to $100 million of the company’s common stock. The timing and amount of share repurchases will be determined by management.
These are the top pharmaceutical stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Pharmaceutical Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Ironwood Pharmaceuticals Inc. (IRWD)||12.20||2.0||1,390||16.3|
|Dynavax Technologies Corp. (DVAX)||17.55||2.0||N/A (see company description)||1,880|
|BioDelivery Sciences International Inc. (BDSI)||4.28||0.4||800.0||13.3|
- Ironwood Pharmaceuticals Inc.: See above for company description.
- Dynavax Technologies Corp.: Dynavax Technologies is a biopharmaceutical company specializing in developing immunotherapy treatments. It develops and commercializes novel vaccines and is collaborating with other biopharmaceutical companies to develop vaccines to treat COVID-19. Valneva SE (VLA), a France-based biotech company working on a COVID-19 vaccine using Dynavax’s CpG 1018 as an adjuvant, recently received a termination notice from the U.K. regarding Valneva’s supply agreement for its COVID-19 vaccine candidate. Despite the termination, Valneva said that it would continue working on its vaccine candidate. Dynavax said that its current CpG 1018 supply contracts still represent a 2021 revenue opportunity of approximately $300 to $400 million. Because the company’s EPS went from negative in the year-ago quarter to positive in the most recent quarter, an EPS growth rate could not be calculated for the table above.
- BioDelivery Sciences International Inc.: BioDelivery Sciences International is a pharmaceutical company specializing in innovative therapies for patients that have serious and debilitating chronic conditions, including chronic pain and acute migraine. The company recently announced that it completed the acquisition of U.S. and Canadian rights to ELYXYB, the only FDA-approved, ready-to-use oral solution for the acute treatment of migraine in adults. The seller was Doctor Reddy’s Laboratories Ltd. (DRREDDY). The total value of the transaction, which was first announced in early August 2021, was $15 million.
These are the pharmaceutical stocks that had the highest total return over the last 12 months.
|Pharmaceutical Stocks with the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|MariMed Inc. (MRMD)||1.00||327.5||521.9|
|22nd Century Group Inc. (XXII)||3.23||525.6||442.8|
|Zomedica Corp. (ZOM)||0.60||583.6||440.6|
|iShares U.S. Pharmaceuticals ETF (IHE)||N/A||N/A||19.3|
- MariMed Inc.: MariMed is a cannabis and hemp company. It offers a full range of cannabis products, including branded products for the treatment of specific medical symptoms. The company operates cannabis facilities and dispensaries in multiple states.
- 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.
- Zomedica Corp.: Zomedica is a veterinary health company. It is working on developing a point-of-care diagnostic platform based on technology designed to detect pathogens in companion animals.
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YCharts. “Financial Data.” Accessed Sept. 12, 2021.
Organon & Co. “Organon Completes Acquisition of Alydia Health – A Medical Device Company Focused on Postpartum Hemorrhage.” Accessed Sept. 13, 2021.
Collegium Pharmaceutical Inc. “Collegium Announces $100 Million Share Repurchase Program.” Accessed Sept. 13, 2021.
Dynavax Technologies Corp. “Dynavax Provides Update on its COVID-19 Collaboration with Valneva.” Accessed Sept. 13, 2021.
Dynavax Technologies Inc. “Dynavax Announces Second Quarter 2021 Financial Results.” Accessed Sept. 13, 2021.
BioDelivery Sciences International Inc. “BioDelivery Sciences International Completes Acquisition of ELYXYB™ for Acute Migraine Treatment in the U.S. and Canada.” Accessed Sept. 13, 2021.
BioDelivery Sciences International Inc. “BioDelivery Sciences Announces Agreement to Acquire U.S. and Canadian Rights to FDA-approved ELYXYB™ for the Acute Treatment of Migraine.” Accessed Sept. 13, 2021.