Recently, I’ve noticed that more and more people have started paying attention to recommended U.S. biotech stocks, and this phenomenon is actually quite interesting.

The healthcare industry really is different. Unlike the electronics industry, which rises and falls with the business cycle, healthcare has a natural advantage—if people eat grains and rice, how could they not get sick? When people get sick, they have to see a doctor and take medicine, so this industry is relatively resistant to economic fluctuations. On top of that, with global population aging, new drugs being launched one after another, and telemedicine booming, the room for imagination in biotech is indeed huge—and it’s also easy for stocks to skyrocket.

But there’s a key point here: biotech companies’ stock prices are often driven not by their current earnings, but by expectations for the future. Many companies are still in the R&D stage and don’t have stable cash flow, so traditional financial metrics can’t really evaluate them. However, once a drug passes clinical trials and receives FDA approval, the stock price often starts to surge. Taiwan’s PharmaDrug is a case in point—during the 2022 stock market crash, it actually doubled, mainly because it obtained U.S. orphan drug certification, and investors saw promising future returns.

Of course, the risks are also significant. Clinical trial results, competitors’ activities and developments, policy changes, patent disputes—any of these could lead to dramatic stock price volatility. So investing in this area requires patience and sufficient risk tolerance.

The reason recommended U.S. biotech stocks have attracted so much attention is that the U.S. truly has the most suitable “soil” in the world for cultivating the medical and pharmaceutical industry. The U.S. biopharmaceutical market is the largest and most active globally; it is expected to reach $445 billion by 2027, with a CAGR of 8.5%. The U.S. has nearly one million professionals working across multiple fields such as R&D, manufacturing, and sales. The best talent is concentrated there, and the capital markets are also quite willing to invest in this type of industry—forming a unique ecosystem.

In the U.S., there’s a saying about “blockbuster drugs,” referring to a single drug with annual sales exceeding $1 billion. Successful big pharma companies are usually willing to invest 50–60% of their revenue into R&D every year. While this can lower EPS, large investment institutions tend to raise their P/E ratios and target prices instead, because they know these pharma companies will continuously bring innovative products to market in the future.

When it comes to specific targets, Eli Lilly (LLY) is currently the largest pharmaceutical company in the world by market cap, with a market value exceeding $840 billion, ranking 10th globally. Its weight-loss drug market is expected to keep growing over the next few years, with North America accounting for 60%. Pfizer (PFE) has a COVID oral medication, and Johnson & Johnson (JNJ) has steady growth along with generous dividends—basically a biotech “king,” making it well-suited for regular investing or long-term shareholding. AbbVie (ABBV) mainly derives its profits from Humira, a treatment for autoimmune rheumatoid arthritis; although there is concern about patent expiration, it still has over a hundred patents that provide protection. Merck (MRK)’s cancer treatment Keytruda is one of the best-selling drugs worldwide; its stock price has risen steadily and it also offers high dividends. UnitedHealth (UNH) benefits from the aging population in the U.S., with revenue and profit continuing to grow.

In Taiwan, there are also quite a number of biotech stocks. For example, SynDaa Chemical (1720) has stable dividend payouts, and Kangsheng Biotech (1783) has fundamentals that are basically steady. However, overall, Taiwan’s capital market is still primarily driven by electronics stocks. Even if there are solid biotech companies, it’s difficult for them to see the kind of multi-decade, even dozens-of-times growth that can happen in the U.S.

To be honest, my top choice for recommended U.S. biotech stocks is still the best option. The U.S. has produced many excellent biopharmaceutical companies with greater scale, innovation, and competitiveness, which also makes it easier to identify high-quality targets that are suitable for investment. Asia’s medical and pharmaceutical market is still in the process of developing and improving. Even with outstanding companies, their performance still doesn’t match that of U.S. biotech stocks. This is due both to differences in the capital markets and differences in industry technology and investors’ professional expertise.

If you want to invest in this area, I recommend paying close attention to developments in U.S. medicine. Globally, U.S. pharmaceutical stocks are indeed the top investment choice today.