Published on 20 Oct 2022 on Zacks via Yahoo Finance

5 Stocks to Bet on in an Innovation-Driven Drug Industry

The drug/biotech sector has been witnessing developments in pipeline areas like rare diseases, gene therapy and editing, and mRNA vaccines. It is expected that innovation will continue to drive growth in the industry in 2023. with advances expected to be made in areas like Alzheimer’s, cell and gene therapy, and mRNA research.Overall, successful innovation resulting in new drug/product approvals, important advances in clinical studies and strategic collaborations with strong partners have kept small and medium-sized drug companies like Jazz Pharmaceuticals JAZZ, Catalyst Pharmaceuticals CPRX, Aerie Pharmaceuticals AERI, Larimar Therapeutics LRMR and Fusion Therapeutics FUSN afloat.

Industry Description

The Zacks Medical-Drugs industry comprises small and some medium-sized drug companies, which make medicines for both human and veterinary use. We have a separate industry outlook discussion on some of the biggest drugmakers in the world. Most of the small drugmakers have a limited portfolio of marketed drugs or no commercial-stage drugs at all. Some of these drugmakers are dependent on just one marketed drug or pipeline candidate. For such companies, upfront or milestone payments from collaboration partners — in most cases their larger counterparts — are the main source of revenues. These companies need ample free cash flow to fund their R&D activity.