US Stock Biotechnology Concept Stocks Investment Guide: Global Medical Market Leaders and Growth Opportunities

The global healthcare industry is currently experiencing rapid expansion. Accelerating population aging, the emergence of new therapies, and mature telemedicine technologies are driving the vigorous development of the medical biotech sector. Unlike traditional cyclical industries, people require medical services regardless of economic fluctuations, making healthcare stocks more resilient to economic cycles and increasingly attractive to investors.

Compared to other regions worldwide, the United States boasts the highest quality healthcare biotech ecosystem and is the most concentrated and valuable market for biotech concept stocks. This article will analyze investment opportunities in the US healthcare industry in depth and select leading stocks worth关注.

Core Characteristics of the Healthcare Biotech Industry

Large global market size with broad growth potential

The US biopharmaceutical market is the largest and most active globally, expected to reach $445 billion by 2027, with a CAGR of 8.5%. This figure reflects the industry’s strong growth momentum.

Enterprise value mainly derived from future expectations rather than current profits

Traditional financial metrics have limited significance in evaluating biotech companies. Most biotech firms are in R&D stages, lacking stable cash flow. However, once a drug passes clinical trials and gains FDA approval, its commercial value often grows exponentially. A typical example is Taiwan’s藥華藥, whose stock price doubled in 2022, mainly driven by its drug receiving orphan drug designation in the US. As of May 2024, the company’s stock price once reached NT$388, but its current financials do not show significant profits. Investors focus on the hidden future revenue potential.

Frequent policy regulation and market events drive stock price volatility

Events such as new drug approvals, clinical trial progress, and regulatory policy changes can significantly impact stock prices. For example, during the COVID-19 pandemic in 2020, vaccine R&D companies’ stock prices surged, but subsequent performance varied. Such stocks are highly volatile and require investors to have strong risk tolerance.

Deep involvement of government and healthcare systems

The healthcare industry is highly regulated by governments, with corresponding policies and drug pricing mechanisms in place. Developed countries’ insurance systems impose strict controls on healthcare services and drug prices, making the market structure more complex.

How to Value Biotech Concept Stocks

Assessment based on product potential rather than current earnings

The pharmaceutical industry has the concept of “blockbusters,” referring to drugs with annual revenue exceeding $1 billion. Successful drug companies typically invest 50-60% of annual revenue into R&D, which suppresses short-term profit margins. However, large institutions tend to raise target prices for these companies because continuous innovation signifies long-term competitiveness. This explains why TSMC’s valuation is higher than UMC’s—TSMC invests continuously in advanced process R&D, while UMC tends to rely on existing technology.

Major US biotech giants generally adopt similar strategies, maintaining moderate profit margins while allocating substantial funds to R&D or acquiring promising small enterprises.

Using PSR (Price-to-Sales Ratio) to evaluate new drug companies

Since many R&D-stage drugs lack profits, capital institutions often use PSR to assess the value of new biotech companies. This metric can more accurately reflect the potential value of biotech firms compared to P/E ratios.

FDA approval is the most critical indicator

Whether a Taiwanese pharmaceutical company or a US-based firm, FDA approval is the core evaluation standard. The FDA has the strictest drug monitoring standards globally. Once a drug is approved by the FDA, the likelihood of rapid approval in other countries significantly increases.

Competitive Advantages of the US Healthcare Market

The US has the world’s largest healthcare market with a relatively market-oriented mechanism. Unlike Taiwan, where the National Health Insurance (NHI) suppresses drug prices, the US allows higher pricing, with insurance companies bearing the costs. This results in higher healthcare costs as a proportion of revenue but also provides ample profit space for innovative companies.

The US healthcare industry employs nearly one million professionals across R&D, manufacturing, sales, and other sectors, forming a complete upstream and downstream ecosystem. Top technological talent congregates here, and the capital markets enthusiastically support this industry, ultimately creating a unique biopharmaceutical ecosystem. Global investors recognize the US as the most favorable environment for pharmaceutical development.

Recommended Leading Companies in US Healthcare Stocks

The US healthcare market is divided into four main sectors: Pharmaceuticals, Biotechnology, Medical Devices, and Healthcare Services. Below are leading stocks in each sector.

Pharmaceutical Leader: Eli Lilly & Co. (NYSE: LLY)

Eli Lilly’s 2024 market cap reaches $842.05 billion, ranking 10th globally, and is the largest pharmaceutical company worldwide. Its weight-loss drug market accounts for about 60% in North America, with strong growth potential in the coming years. LLY is a biotech concept stock that investors must watch.

Vaccines and Specialty Drugs: Pfizer (NYSE: PFE)

Pfizer has gained widespread recognition for its COVID oral antiviral drug, with stable stock price growth. It is an ideal long-term investment opportunity during market corrections.

Consumer Healthcare and Medical Devices: Johnson & Johnson (NYSE: JNJ)

Similar to Pfizer, J&J’s stock price grows steadily with generous dividends, with relatively moderate volatility. It is suitable for regular investment or long-term holding strategies, making it a “blue-chip” biotech stock. Its upward trend is clear, and volatility is manageable, also suitable for margin trading.

Immunology and Oncology Experts: AbbVie (NYSE: ABBV)

AbbVie’s main profit comes from Humira (used for rheumatoid arthritis). Despite patent expiration risks, the company holds hundreds of patents creating barriers to competition. In 2018, AbbVie reached licensing agreements with major firms like Pfizer and Amgen, allowing it to sell biosimilars after 2023 and collect licensing fees. The company continues R&D to find the next blockbuster drug, offering investment value during downturns.

Oncology Therapy Leader: Merck & Co. (NYSE: MRK)

Merck’s Keytruda is one of the world’s best-selling anticancer drugs. The company’s stock price has steadily risen, with high dividend levels. It is also a good long-term investment during market corrections.

Healthcare Service Integrator: UnitedHealth Group (NYSE: UNH)

UnitedHealth benefits from aging populations and increasing healthcare demand, with revenue and profits growing steadily. Its stock price has been rising long-term, with stable dividend income.

These companies are core players in the US healthcare market, possessing strong competitiveness, innovation capacity, solid financial performance, cash flow, and attractive investment returns.

Investment Opportunities in Taiwanese Pharmaceutical Stocks

Synmosa Biopharma (Taiwan Stock Code: 1720)

Synmosa has diversified布局 in Western medicine, health supplements, and medical devices. Recent years have seen slow revenue and net income growth, but assets steadily increase, and debt ratios remain healthy. Its stable dividends attract many dividend-focused investors.

Kenda Biotech (Taiwan Stock Code: 1783)

Kenda engages in the production and sales of biopharmaceuticals and medical devices, with business divided into consumer products and biomedical segments. It turned profitable in 2017, with stable fundamentals in recent years, healthy asset-liability structure, and is worth close attention.

Summary of Investment in Healthcare Biotech Stocks

Healthcare biotech stocks are highly attractive due to their growth potential and cyclical resistance. However, Taiwan’s overall capital market remains dominated by electronics, making it difficult for biotech companies to achieve the multi-fold gains seen in US stocks.

The US remains the best investment destination for healthcare with numerous excellent biopharmaceutical companies, offering advantages in scale, innovation, and competitiveness. While the Asian healthcare market is developing, its stock performance and overall strength still lag behind US pharmaceutical stocks.

Investing in healthcare stocks requires professional industry knowledge. It is recommended that interested investors closely monitor US healthcare industry developments. Globally, US healthcare biotech concept stocks are currently among the most promising investment targets.