Recently researching recommended U.S. biotech stocks, I found this sector truly worth deep attention.

First, let's discuss why the U.S. pharmaceutical and biotech market is so special. The U.S. is essentially the world's largest pharmaceutical market, projected to reach a size of $445 billion by 2027, with an annual compound growth rate of 8.5%. Unlike other industries, healthcare demand is rigid; people will always get sick, so this industry is relatively less affected by economic fluctuations. Moreover, the U.S. capital markets are particularly open to biotech investments, attracting top talent and capital flows, forming a unique ecosystem.

The key to investing in these stocks is understanding their valuation logic. Biotech companies usually lack stable cash flow, so traditional financial metrics don't apply; the market focuses more on future expectations. Once a drug gets FDA approval, the stock price often starts soaring. Taiwan's PharmaDrug is a typical example; during the 2022 stock market crash, it doubled in value mainly because of orphan drug certification approval. Investors are looking at future revenue rather than current profits.

Speaking of recommended U.S. biotech stocks, I notice several heavyweight targets worth watching. Lilly (LLY) is now the world's largest pharmaceutical company by market cap, exceeding $840 billion. Its weight-loss drug market is expected to continue growing, with North America accounting for 60% of revenue. Pfizer and Johnson & Johnson are stable, steadily growing old-line pharma stocks with relatively low volatility, suitable for dollar-cost averaging or long-term holding. J&J even offers generous dividends, making it basically a biotech king.

AbbVie mainly relies on Humira, a rheumatoid arthritis drug, to support its revenue. Although its patent will expire, it still has hundreds of patents protecting it and continues investing in R&D to find the next blockbuster drug. Merck's Keytruda is one of the world's best-selling cancer drugs, and the company also offers attractive dividends. UnitedHealth benefits from the aging U.S. population and increasing healthcare demand, with revenue and profit continuously growing.

Interestingly, large pharma companies usually don't allocate all profits to dividends but instead reinvest 50-60% of revenue into R&D or acquisitions of potential new drug companies. This may seem to lower EPS, but major investment institutions tend to raise their target prices for these companies because they know innovation will keep flowing. That's also why TSMC's P/E ratio can be higher than UMC's; UMC's abandonment of advanced process technology is like living off its old reputation.

Taiwan also has some pharmaceutical stocks worth noting, such as Synmed and Kangchen Biotech, but honestly, their scale and innovation capacity still can't compare to U.S. stocks. Taiwan's capital market mainly focuses on electronics stocks; even good biotech companies rarely see multi-tens-fold gains like in the U.S.

Currently, the U.S. remains the best market for pharmaceuticals, whether in terms of capital support, talent concentration, or regulatory environment. The FDA's standards are the strictest worldwide; once a drug is approved by the FDA, it’s generally quick to gain approval elsewhere. In contrast, Asian pharmaceutical markets are still developing, with gaps in investor professionalism and market depth.

Investing in U.S. biotech stocks indeed requires a deeper understanding of the industry; you can't just look at short-term stock price fluctuations. But in the long run, these leading stocks I recommend have strong competitiveness, solid financial performance, and good investment returns. If you're interested in entering, I suggest paying close attention to FDA approval trends and new drug clinical trial progress, as these are often key drivers of stock price movements.