Biotech Stock Picks: Seize Investment Opportunities in the Medical Innovation Wave

The global healthcare market is experiencing rapid growth. With an aging population, widespread telemedicine, and continuous emergence of new drugs, biotech stocks have become a key focus for investors. Unlike traditional electronics industries affected by economic cycles, the healthcare biotech sector shows relatively stable growth potential due to the essential medical needs of people. Especially in the U.S., the pharmaceutical market still offers the most favorable industry ecosystem worldwide, highlighting the value of biotech stocks recommended in the U.S. This article will analyze investment opportunities in biotech stocks and outline the global market landscape for investors.

Why Are Biotech Stocks Worth Watching: Core Drivers of Industry Development

The core logic behind biotech stock recommendations lies in the long-term, predictable growth of the healthcare industry. As the largest biotech market globally, the U.S. is projected to reach a market size of $445 billion by 2027, with a compound annual growth rate (CAGR) of 8.5%.

Death and aging are natural laws. Regardless of economic fluctuations, healthcare demand remains constant. This makes the healthcare biotech industry more resilient to economic cycles compared to other sectors. When the broader market is volatile or electronic stocks are under pressure, biotech stocks often perform more steadily, which is a key reason they are important assets in investors’ portfolios.

In recent years, events like the pandemic and the popularity of weight-loss drugs have fueled a surge in biotech investments. During the 2022 market crash, many R&D-focused biotech companies defied the trend and rose, reflecting investors’ expectations of future drug revenues—revenues that are fundamentally unaffected by economic conditions and hold enormous growth potential.

Assessing the Investment Value of Biotech Stocks: Going Beyond Traditional Financial Metrics

Future Expectations Drive Biotech Valuations

Traditional publicly traded companies derive their value from current cash flows and profits. In contrast, most biotech firms are still in R&D stages, often unprofitable and losing money year after year. Their true value depends on whether pipeline drugs can successfully pass clinical trials and gain FDA approval.

Once a new drug is approved by the FDA, it often triggers a sharp rise in stock price. For example, Taiwan biotech company PharmaDrug saw its stock double in 2022 after its drug received orphan drug designation in the U.S., even though the company’s EPS was still negative 2.93 NT dollars at that time. Investors are not betting on current losses but on the future revenue potential—these revenues are not constrained by economic cycles and are based on the clinical value of the drugs.

PSR Method: The Key to Valuing Biotech Stocks

Since R&D-stage biotech companies lack traditional profit indicators, institutional investors often use the Price-to-Sales Ratio (PSR) to evaluate their value. This metric focuses on the company’s revenue-generating potential rather than current profits, making it more suitable for growth-stage biotech firms.

The “Blockbuster Drug” Investment Logic

A key concept in the pharmaceutical industry is the “blockbuster” drug—one with annual sales exceeding $1 billion. Successful companies that develop blockbuster drugs continue to invest 50-60% of their revenue annually into R&D and acquisitions to seek the next blockbuster. While this may lower EPS temporarily, it allows large institutional investors to boost PE ratios and target prices, recognizing that the company’s innovative pipeline will keep delivering new products.

This logic is similar to TSMC’s high PE valuation: continuous investment in advanced process R&D. Conversely, UMC’s announcement to abandon advanced process investments has led the market to become more pessimistic—relying solely on legacy technology, which will eventually be exhausted.

FDA Approval as a Global Passport

Whether a Taiwanese or American company, the most critical milestone is FDA approval. The FDA enforces the world’s strictest drug regulations. Once a drug passes FDA approval, approval processes in other countries are often smoother, making FDA approval a key catalyst for biotech stock valuation.

Risks in Biotech Investing

While the outlook for biotech stocks is promising, risks are significant. Clinical trial failures, breakthroughs by competitors, policy changes, patent disputes, and other factors can cause sharp stock price swings. Many vaccine-related stocks have historically turned out to be “phantoms,” with their valuations collapsing when the Federal Reserve shifts policy.

Stock prices are often affected by uncertainties—trial results, market competition, regulatory environment, patent protection, and other factors can cause volatility. Therefore, investing in biotech stocks requires patience and risk tolerance.

Additionally, biotech industries are heavily regulated by governments and insurance systems. Many developed countries have strict policies on drug procurement and advertising. For example, Taiwan’s national health insurance system controls drug prices, adding complexity to the market.

The US vs. Asia: Different Market Landscapes for Biotech Stocks

Why the US Is the Best Land for Biotech Stocks

The U.S. is the world’s largest pharmaceutical market and the top choice for biotech stock investments. Its advantage lies not just in market size but in a complete ecosystem.

First, the U.S. healthcare system is highly capitalized. Drug prices are market-driven, with insurance companies covering medical costs, and consumers paying through insurance. This system allows pharmaceutical companies to set high prices for innovative drugs, incentivizing R&D investment. In contrast, Taiwan’s national health insurance system keeps drug prices low annually, leading many companies to avoid importing the latest drugs into Taiwan.

Second, nearly one million professionals work in the U.S. biotech and pharmaceutical industry, covering R&D, manufacturing, and sales. The strong employment prospects attract top talent worldwide.

Third, the U.S. capital markets are highly receptive to healthcare innovation, willing to fund high-risk, high-reward biotech companies. This creates a virtuous cycle: ample funding supports R&D → attracts talent → fosters a thriving industry ecosystem → spurs more innovation → attracts more investment.

As a result, the U.S. has cultivated the world’s most extensive, innovative, and competitive biotech and pharmaceutical companies, making it easier for investors to find quality targets. Globally, the U.S. is recognized as the most favorable environment for healthcare development.

Growth Challenges in the Asian Market

In contrast, Asian pharmaceutical markets are still developing their ecosystems. Even promising biotech companies often underperform compared to U.S. biotech stocks in terms of stock price appreciation and overall returns. This is due to differences in capital market efficiency, technological levels, and investor expertise.

This does not mean Asian biotech stocks have no opportunities, but when seeking global investment targets, U.S. biotech stocks remain the first choice.

Selected U.S. Biotech Investment Targets

The U.S. healthcare market is divided into four major sectors: Pharmaceuticals, Biotechnology, Medical Devices, and Healthcare Services, each with leading companies. Here are some top-tier representatives:

Eli Lilly (LLY.US)

Eli Lilly is one of the largest global pharmaceutical companies. According to CompaniesMarketCap, in 2024, Lilly’s market cap reached $842.05 billion, ranking 10th worldwide and becoming the largest pharmaceutical company globally that year. About 60% of revenue comes from North America, with a growing weight in the weight-loss drug market, making Lilly a must-watch investment target.

Pfizer (PFE.US)

Pfizer gained fame with its oral COVID-19 drug for mild cases. The company’s stock has shown steady long-term growth. During market corrections, Pfizer often presents a good entry point for long-term investors.

Johnson & Johnson (JNJ.US)

J&J, similar to Pfizer, has stable stock growth and generous dividends. Its lower volatility makes it suitable for dollar-cost averaging and long-term holding. In biotech, J&J is considered a “blue-chip,” with stability making it a preferred margin trading target.

AbbVie (ABBV.US)

AbbVie mainly develops immunology, oncology, and virology drugs. Its revenue has been driven long-term by Humira, approved by the FDA in 2002 for rheumatoid arthritis. As the drug’s indications expand, revenue continues to grow.

Concerns about patent expiration have been addressed by AbbVie’s extensive patent portfolio—over 100 patents create a strong patent moat. Moreover, in 2018, AbbVie signed licensing agreements with Pfizer, Amgen, and others, allowing these companies to sell biosimilars in the U.S. after 2023 and collecting licensing fees. The company also invests heavily in R&D to seek the next blockbuster. This strategic layout makes AbbVie an attractive entry point during dips.

Merck (MRK.US)

Merck’s story began with Jacob Merck opening a small pharmacy in Darmstadt, Germany, centuries ago, evolving into a global healthcare solutions provider. Its flagship product, Keytruda, is one of the world’s best-selling cancer treatments.

The stock has steadily risen and offers attractive dividends. During U.S. market corrections, Merck is an ideal long-term investment entry.

UnitedHealth (UNH.US)

UnitedHealth benefits from the aging U.S. population and increasing healthcare needs, with continuous growth in revenue and profit. Its stock price has trended upward over the long term and offers good dividends.

All these companies are leading players in the U.S. healthcare market, with strong competitiveness, continuous innovation, solid financials, robust cash flow, and good returns on investment.

Taiwan Biotech Stocks to Watch

Sinphar Pharmaceutical (1720)

Sinphar is a diversified pharmaceutical company involved in Western medicine, health supplements, medical devices, cosmetics, and milk powder sales. Revenue and net profit have grown slowly in recent years, with assets steadily increasing and long-term stable debt ratios.

While its growth momentum is modest and fundamentals are average, the company’s stable dividends make it popular among Taiwan’s dividend investors and a choice for regular investment plans.

Hopax Biotech (1783)

Hopax Biotech produces and sells biopharmaceuticals, medical devices, skincare products, and fine chemicals. Its business is divided into two segments: consumer products (facial cleansers, skincare, medical aesthetics) and biomedical products (bone repair materials, medical injections, ophthalmic drugs).

Since turning profitable in 2017, its fundamentals have stabilized, with healthy asset-liability ratios and low debt levels, making it a noteworthy investment.

Practical Investment: How to Trade Biotech Stocks

For Taiwanese investors, trading U.S. stocks via brokers like Mitrade has become mainstream. This approach allows tracking U.S. stock prices without directly holding individual stocks, enabling quick long or short positions, high flexibility, low barriers, and suitability for short-term strategies.

Specific trading steps:

Step 1: Open an account easily (choose demo or real account, apply online via mobile app)

Step 2: Search for the market, click “Contracts” to view product details

Step 3: Open long or short positions (bullish or bearish)

Step 4: Set order parameters, including trade size, stop-loss/take-profit, limit price

Step 5: Submit the order to start trading

Asset prices fluctuate in real-time; investors should monitor market dynamics constantly. Mitrade supports trading via mobile, web, and PC, with demo accounts available without deposit for practice and real-time strategy tracking.

Summary of Biotech Stock Recommendations

The reason biotech stocks are highly regarded stems from the inherent long-term certainty of the healthcare industry. Their large growth potential, cyclical resilience, and policy support determine their importance in asset allocation.

However, Taiwan’s overall capital market remains dominated by electronics stocks. Even with excellent biotech companies, their stock price appreciation often cannot compare to U.S. stocks. As the pandemic becomes normalized and governments emphasize biotech industries, Taiwanese investors’ attention to biotech stocks may increase. But currently, the U.S. remains the best market for healthcare.

The U.S. has cultivated numerous outstanding biotech and pharmaceutical companies with advantages in scale, innovation, and competitiveness, making it easier for investors to find quality targets. Although Asian pharmaceutical markets are developing, the gap remains significant—affected by market efficiency, technological levels, and investor expertise.

Compared to other investment fields, biotech investing requires a deep understanding of the healthcare industry. Interested investors should closely follow U.S. pharmaceutical developments. Globally, U.S. biotech stocks continue to be the top investment choice—offering unmatched risk-adjusted returns and industry growth certainty.