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Pharmaceutical stocks to watch

Pharmaceutical stocks are the shares of wider healthcare companies that focus on developing, manufacturing and distributing pharmaceutical products, such as drugs, medicines and vaccines. Investing in pharmaceutical stocks is a popular trend in times of political or economic instability. For example, given the Covid-19 crisis, pharmaceutical companies have been in high demand as they provide products and equipment, in turn increasing their share price and value.

This article contains a list of global pharmaceutical shares with some of the highest market capitalisations, dividend yield percentages and overall stock value according to stock market indices​ such as the FTSE 100. This information is accurate as of February 2021. Our trading platform offers spread betting and CFD trading on both blue-chip stocks, large-cap stocks and pharma penny stocks, so read on to find out how you can get involved in trading pharmaceutical stocks with us.

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Pharmaceutical share tips

The pharmaceutical industry is part of the wider healthcare sector, and these companies are active all year round, no matter the global situation. Share prices tend to represent the perceived value of a company by investors, and any subsequent profit and loss that may result after opening a trade. In order to value pharma stocks, it's important to analyse company fundamentals: the internal and external factors that may influence the performance of the business. This is part of fundamental analysis, which most traders will undertake before opening a position in the long term, though less often in the short term. Price-to-earnings (P/E) ratios help to value a company's share against its competitors.

Pharmaceutical stock investors look for growth and earnings potential and often prefer high-yield stocks, as this means that the company is likely to pay consistent dividends. Paying dividends to investors can help to strengthen loyalty, as well as confidence in success and future payouts.

Total return is also a good indicator of healthcare stock​ performance. It shows the return rate of an investment over a period of time, measured by interest, capital gains and dividend statistics. These aspects can all be used to measure the value of top pharmaceutical stocks.

Pharma penny stocks

In recent years, biotech stocks​ and pharmaceutical penny stocks​​ have become a particular interest to investors as they have often grown into widespread, multinational corporations, including Novavax and Pharma Mar. Penny stocks in the pharma sector have become especially popular throughout the Covid-19 pandemic, as many small businesses raced to develop a coronavirus vaccine, rivalling their larger competitors.

​In particular, Pharma Mar claimed that its treatment for coronavirus was more than 2,800 times more effective than that of its biotech rival, Gilead Sciences. Pharma Mar's share price previously traded for under $5 until the peak of the pandemic in early 2020, and has been rising consistently ever since. The same situation applies to Inovio Pharmaceuticals, which was considered a pharma penny stock until February 2020, where its share price rose to around 10 times the original.

Top pharma stocks

All of the below shares can traded on our Next Generation trading platform through spread bets and CFDs. Please note that stocks are only available with a live account and cannot be traded with a demo account. Other perks of our live account include an exclusive trading forum, access to pharmaceutical ETFs and a range of platform features and trading tools.

GlaxoSmithKline (GSK)

GSK is a global pharmaceutical company that is involved in the manufacturing and marketing of vaccines, medicines and other healthcare-related products, headquartered in London. The wide range of operations make it a relatively reliable pharma stock and helps to diversify a trader’s risk portfolio. Relatively low-risk stocks tend to appeal to long-term investors; for this reason, it is considered one of the most popular UK pharma stocks right now.

Market capitalisation: $86.39bn

Dividend yield: 6.58%

AstraZeneca (AZN)

AstraZeneca conducts its research and development in three global regions: Cambridge, UK; Maryland, US; and Mölndal, Sweden. It's one of the most advanced developers of prescription medicine for cardiovascular, respiratory and autoimmunity purposes. It's also one of the fastest-growing top pharma stocks in 2021 due to the pandemic, leading Astrazeneca’s share price to rise within recent months. In December 2020, the Oxford-AstraZeneca vaccine was the second to be approved by the MHRA and distributed to the general public, which will continue in the following months.

Market capitalisation: $128.93bn

Dividend yield: 2.83%

Gilead Sciences (GILD)

Gilead is a US biopharmaceutical company that focuses on producing antiviral solutions for illnesses that are often overlooked by other healthcare companies. This includes treatment for HIV, liver disease and other inflammatory diseases that are similar to influenza. Gilead’s stock price shot up by 5% in a matter of days after releasing the news that they were a primary contender in the race for a Covid-19 vaccine in early 2020.

Market capitalisation: $79.01bn

Dividend yield: 4.31%

AbbVie (ABBV)

AbbVie is a spin-off of Abbott Laboratories, dedicated to treating chronic autoimmune diseases on a global level, including blood cancers, Parkinson’s and Crohn’s disease. In June 2019, it acquired Allergan, another biopharmaceutical company from Ireland, whose combined revenue has led to a massive expansion of the company. In turn, this has increased AbbVie’s share price. It also pays consistent dividends to investors of a high percentage.

Market capitalisation: $189.55bn

Dividend yield: 4.50%

Trade on almost 200 pharmaceutical shares

Novavax (NVAX)

Novavax is a US vaccine developer for autoimmune diseases. In comparison with the blue-chip stocks in this list, Novavax is a small-cap pharma stock and has a newer and therefore smaller presence in the healthcare market. Although it doesn't pay out dividends, it showed fast-paced developments in clinical testing for the Covid-19 vaccine, helping the company value and Novavax’s stock price to double since the start of 2020.

Market capitalisation: $15.19bn

Dividend yield: N/A

Pfizer (PFE)

Pfizer is one of the world’s largest pharmaceutical companies, headquartered in New York City. It was founded in 1849 and Pfizer’s share price has been featured on the Dow Jones Industrial Average stock index since 2004, setting a standard for rising pharma stocks. Pfizer develops and distributes medicines and vaccines worldwide, for inflammatory and immunology diseases, as well as rare diseases. This blue-chip stock provides consistent dividends and opportunities for company growth and revenue, making it one of the most popular biotech stocks among traders. The Pfizer-BioNTech vaccine was the first to be approved for distribution in the UK in December 2020, which has shown to be 95% effective against Covid-19.

Market capitalisation: $187.07bn

Dividend yield: 4.55%

GW Pharmaceuticals (JAZZ)

GW is a British pharmaceutical company, best known for its treatment for multiple sclerosis, which included medicinal cannabis. It was the first natural cannabis plant derivative to gain market approval across the globe. Its contribution to world-leading developments in science means that GW Pharmaceuticals’ stock price is of a high value. Many pharmaceutical companies, such as GW Pharmaceuticals, are involved in the production of medical marijuana. Read our article on marijuana stocks for more information.

Market capitalisation: $6.51bn

Dividend yield: N/A

Sanofi (SAN)

Sanofi is seen as a relatively safe bet in the world of healthcare stocks. It's a Paris-based pharmaceutical company that focuses on therapeutics, most notably for multiple sclerosis, various cancers and arthritis. It is the world’s fifth largest pharmaceutical company in terms of prescription sales from selling a wide range of over-the-counter drugs to consumers. This makes investing in Sanofi stocks a very appealing choice for investors.

Market capitalisation: $114.98bn

Dividend yield: 3.69%

Novartis (NOVN)

Headquartered in Basel, Switzerland, Novartis is one of the world’s largest pharmaceutical companies based on market capitalisation, along with Pfizer. Its main purpose is to generate prescription medicines on a global basis for immunology, dermatology and respiratory purposes. Novartis boasts a high-value share price, although it follows the European practice of only paying dividends to investors once a year, instead of quarterly. This may deter investors looking for more frequent payouts.

Market capitalisation: $196.46bn

Dividend yield: 3.56%

Moderna (MRNA)

Investing in Moderna stocks is another opportunity on this list for investors that are interested in rising pharma stocks. Moderna is a US biotech company that bases its research and development for vaccines and therapeutics primarily on mRNA molecules. The company already has alliances with other top pharma companies, including AstraZeneca and Merck, which is an indication of its promising future within the healthcare sector. In the UK, Moderna's vaccine was the third to be approved for distribution to the general public in January 2021, solidifying this small-cap stock as a main competitor against its large-cap rivals.

Market capitalisation: $58.51bn

Dividend yield: N/A

Sinopharm (1099)

Sinopharm is a Chinese healthcare network that owns many subsidiaries within the sector, relating to medical distribution, logistics, research and development, and retailing of clinical drugs. This is throughout mainland China and more recently, on an international level. Sinopharm Group is a primary candidate in the development of the Covid-19 vaccine and professionals are expecting it to be ready for distribution in 2021.

Market capitalisation: $6.94bn

Dividend yield: 7.13%

Investing in pharmaceuticals

Pharmaceutical shares are available to buy and sell on the stock market, and some investors choose to explore pharma stocks through ETF trading. These shares are often listed on a major stock exchange, such as the London or New York stock exchanges. This method involves buying and holding a share for a long period of time, and this requires you to take ownership of the asset.

An alternative of investing is to trade on the underlying price movements of pharmaceutical stocks, which is explained in more detail below.

How to trade pharmaceutical stocks with CMC Markets

You can trade on pharmaceutical stocks on our platform through spread bets and CFDs (contracts for difference). Spread betting enables you to trade tax-free on the price movements of the stocks; though tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK. You can also invest in pharmaceutical stocks through major stock indices, such as the FSTE 100, which contains companies such as GSK and AstraZeneca. Read more about how to trade the FTSE 100.

With both derivative products, you open a position based on whether you think a pharmaceutical share price will rise or fall, and depending on which way the market moves, this will result in a profit or loss. CFDs are contractual agreements to exchange the difference in value of an asset between the time a position is opened and closed. Profits and losses also rely on the movements in the share market. Read about the differences between spread betting and CFD trading to find which product is most suitable for you.

Please note that spread betting and CFDs are leveraged products, which means that you're only required to place a deposit of the full trade value to gain exposure to the market. For this reason, profits and losses are magnified.

It is possible to filter pharmaceutical asset classes on our trading platform in order to see a relevant list of shares and ETFs, as shown below. Simply open the Product Library, filter sub-type by 'Pharmaceuticals' and this will open a list of almost 200 instruments within the sector.

Pharmaceutical stock news

While trading pharma stocks, it's important to keep up to date with news and key developments across the world. The stock market can be volatile and share prices often fluctuate based on announcements. Our professional market analysts deliver frequent content through our news and analysis section in order to make sure that you have all the information you need when trading on rising pharmaceutical stocks.

We also have a trading insights hub that is complete with Reuters news and commentaries, interactive market calendars for data and price charts, and fundamental analysis reports from Morningstar.

FAQS

When is a good time to invest in pharmaceutical stocks?

Pharmaceutical stocks can be considered a relatively good investment at any point in the year, as there is a consistent demand for healthcare services. Due to a constant stream of research, development and clinical trialling, pharmaceutical shares can provide long-term returns for investors, if successful. Read more about share trading.

How can I trade pharmaceutical stocks?

To start trading on pharmaceutical stocks, first choose whether to spread bet or trade CFDs. We offer over 9,500 shares and ETFs within the stock market on our web-based platform, many of which belong to the pharmaceutical and wider healthcare industries.

Can you profit from pharma penny stocks?

Pharma penny stocks can be a risky investment, as these companies tend to be small, low-valued and in the growth stage of development, in contrast to blue-chip companies, such as Pfizer and GlaxoSmithKline. Learn more about trading penny stocks.

What are the advantages of investing in pharmaceuticals?

Trading pharmaceutical stocks can help to diversify your trading portfolio, as they can be grouped under categories such as research, development, retail and manufacturing. Most pharma companies also pay consistent dividends to investors, which is a major appeal for share traders. See our list of the best-yielding dividend stocks to trade now. However, pharmaceutical stocks come with the usual risks of trading with leverage. This can help to magnify profits but equally losses as well.

How can you diversify your trading portfolio with stocks?

Trading stocks from a variety of sectors, such as healthcare, technology and energy, as well as bonds and exchange-traded funds, can help to diversify your trading portfolio. This means that a well-performing stock can help to offset risk from a declining asset in your portfolio, reducing potential overall losses. Read more about portfolio diversification.

Browse more stocks to watch​ >

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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