Best biotech stocks to watch

Biotech stocks in brief

Biotech stocks are companies which focus on developing new drugs, therapies or medical technology — often at the bleeding edge of scientific development. They can be very financially rewarding, as new medical treatments tend to generate significant revenue.

However, biotechs come with a correspondingly high level of risk, as unlike other sectors where growth is both steady and incremental, biotechs rely on binary outcomes with each individual trial. Successful approval in key areas like oncology, gene therapy or rare diseases from the likes of the MHRA in the UK or the FDA in the US can see large share price gains — but failure can see biotech stocks fall rapidly.

It’s worth noting both that the majority of clinical trials fail, and that trials are very expensive to develop and implement. Many investors prefer to invest in larger biotechs or ETFs simply to ameliorate some of the risk profile; clinical trials often take years, and companies can burn through many millions in capital before making a breakthrough. On the other hand, biotechs are often key recipients of government support — including grant funding.

This presents an interesting investment sector, because investors can gain a research edge not possible with other sectors —where you assess the science as much as the financials. However, this can be difficult given the complexity of the science. And given the high risk, high reward nature of biotechs in general, they tend to attract investors and traders who can sometimes drive valuations beyond fundamentals on sentiment.

One key concern to keep an eye on is the global regulatory environment. Even after a drug gains approval, pricing pressures, competition, and potential legal issues can impact profitability — and there’s nothing to stop another company developing a superior treatment. Then you have everything from healthcare policies to patent expirations and insurance coverage decisions to contend with.

Despite the risks, biotech remains an exciting sector for investors looking for growth, and for many there is also an ethical component to their decisions when investing in companies developing life-changing treatments.

Looking ahead, key battlegrounds will include the growing role of AI and machine learning in biotech research — which could drastically reduce success rates — alongside national security and ethical concerns regarding new techniques such as gene editing, alongside balancing clinical trial patient safety with medical progress.

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Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

We also offer many biotechnology-focused ETFs, including the popular iShares Biotechnology ETF, which tracks US-based biotech stocks. It sports a 0.45% expense ratio, with top holdings including Gilead Sciences and Amgen.

Top biotech stocks to watch

Biotechs are generally considered to be reliant on new drug research for potential revenue rather than existing product lines, though this distinction is not always clear cut. With the larger companies, it’s perhaps more accurate that they rely on continuing to develop new drugs as their patents on profitable treatments run out.

These are the ten largest biotechs in the world as of February 2025.

1. Eli Lilly (NYSE: LLY)
2. Johnson & Johnson (NYSE: JNJ)
3. Novo Nordisk (NYSE: NVO)
4. AbbVie (NYSE: ABBV)
5. Roche (SWX: ROG)
6. AstraZeneca (LON: AZN)
7. Novartis (NYSE: NVS)
8. Merck (NYSE: MRK)
9. Thermo Fisher Scientific (NYSE: TMO)
10. Amgen (NASDAQ: AMGN)

Eli Lilly (NYSE: LLY)

Eli Lilly is the world’s largest pharmaceutical company, and focuses on diabetes, oncology, immunology, and neuroscience treatments. It is perhaps best known for its insulin and breakthrough diabetes treatments, though is also making headlines with obesity drug, Zepbound. Eli Lilly’s most promising potential treatment in its clinical pipeline is arguably Alzheimer’s drug donanemab, a monoclonal antibody targeting amyloid plaques.

Eli Lilly enjoys market dominance in the growing GLP-1 (diabetes and obesity) drug market. However, some investors remain way of the high valuation and potential competition in the obesity and diabetes space from Novo Nordisk. Additionally, regulatory scrutiny on drug pricing from the Trump administration could restrict growth.

Johnson & Johnson (NYSE: JNJ)

Johnson & Johnson is a global healthcare conglomerate operating across the pharmaceutical space — but in research, it specialises in oncology, immunology, and infectious diseases. It owns Stelara, a biologic used to treat psoriasis and Crohn’s disease which has been a significant revenue driver for the company’s immunology segment.

The pipeline also includes Talquetamab, a bispecific antibody therapy for multiple myeloma, which has shown strong early results. However, investors should be aware of legal risks from ongoing lawsuits related to their branded talc powder — alongside stiff competition in key therapeutic areas.

Novo Nordisk (NYSE: NVO)

Novo Nordisk specialises in diabetes and obesity treatments, vying for pole position with Eli Lilly in the GLP-1 market. Blockbuster drug — and household name — Ozempic has transformed diabetes care, while Wegovy is arguably now the standard for obesity treatment. Both drugs have supercharged revenue for the company.

But it’s not standing still. Novo Nordisk is developing CagriSema, a combination of semaglutide (the active ingredient in Ozempic/Wegovy) and cagrilintide, aimed at further improving weight loss. The company benefits from strong demand for obesity treatments, but rivals are investing significant amounts of capital to catch up.

AbbVie (NYSE: ABBV)

AbbVie is a biotech best known for its immunology and oncology treatments. Its flagship drug, Humira, was one of the best-selling drugs in history for autoimmune diseases — and the company has now successfully transitioned to newer immunology drugs like Skyrizi and Rinvoq.

Perhaps its most promising pipeline drug is Epcoritamab, a bispecific antibody for aggressive B-cell lymphoma, which has already shown strong efficacy. However, the company faces revenue pressure from Humira's decline and rising competition in the immunology space.

Roche (SWX: ROG)

Roche is a Swiss pharmaceutical and diagnostics giant known for its oncology, neurology, and rare disease treatments. Its top-selling cancer drug is Tecentriq, which is widely used around the world in lung and bladder cancer treatments. Roche also has a strong presence in diagnostics, particularly as the market leader in personalised medicine.

Roche’s best-known pipeline drug is Gantenerumab, an Alzheimer’s treatment that has faced setbacks but continues to be explored in different formulations — the drug could become a blockbuster given the limited treatment options for the disease at present, but significant capital has been sunk into its development.

AstraZeneca (LON: AZN)

AstraZeneca is a UK-based pharmaceutical company — usually the most valuable company in the country — with strong positions in oncology, respiratory diseases, and cardiovascular treatments. Its blockbuster drug Tagrisso is widely used as the key treatment in non-small cell lung cancer.

One of its most promising pipeline drugs is Datopotamab deruxtecan, an antibody-drug conjugate being tested in various cancers, including breast and lung cancer. Core investment risks include pricing pressures and competition in the oncology space from rivals like Roche and Merck.

Novartis (NYSE: NVS)

Novartis is another Swiss pharmaceutical giant, with expertise in oncology, ophthalmology, and cardiovascular disease. Its most famous treatment is Kisqali, a CDK4/6 inhibitor for breast cancer that has shown strong efficacy and swift market adoption.

Novartis is also devleoping Iptacopan, a first-in-class treatment for rare blood disorders like paroxysmal nocturnal hemoglobinuria. Novartis is currently restructuring with a focus on high-margin, original drugs due to competition in the generics segment.

Merck (NYSE: MRK)

Merck is best known for its blockbuster cancer immunotherapy, Keytruda, which has become the dominant checkpoint inhibitor in treating various cancers. The company is continuing to trial the drug on different cancers, with varying degrees of success — but generating more revenue.

Amongst its pipeline, Merck is developing V116, a next-generation pneumococcal vaccine aimed at improving protection for older adults. However, the company arguably is over-reliant on Keytruda which could become a sticking point if the current pipeline fails.

Thermo Fisher Scientific (NYSE: TMO)

Thermo Fisher is a leading life sciences and diagnostics company that provides laboratory equipment, reagents, and contract manufacturing services. It plays a crucial role in pharmaceutical R&D, particularly in precision medicine — and is a very different kettle of fish compared to the rest of the biotechs on this list.

Thermo Fisher is currently expanding into cell and gene therapy manufacturing, helping other biotech firms scale their production. It benefits from highly diversified revenue streams and steady demand from the life sciences sector but also has to contend with cyclicality in biotech funding which tends to correlate strongly with the wider economy.

Amgen (NASDAQ: AMGN)

Amgen is a biotech company specializing in oncology and autoimmune diseases. Its current top treatment is Repatha, a cholesterol-lowering PCSK9 inhibitor that competes with Novartis’ Leqvio. Amgen has also expanded in oncology with Lumakras, a KRAS inhibitor for lung cancer.

Its most promising pipeline drug is Tarlatamab, a bispecific T-cell engager for small cell lung cancer. However, like Merck, Amegn;s core challenge is arguably the longer-term need to replace its aging blockbuster drugs with new treatments as patents run out.

Biotech stocks summed up

• Biotech stocks are companies which focus on developing new drugs, therapies or medical technology
• Biotechs rely on binary outcomes when testing each new treatment, which means either massive success or a large failure
• Many investors prefer to invest in larger biotechs or ETFs to ameliorate some of the risk profile
• One key concern to keep an eye on is the global regulatory environment