Best US Pharma Stocks
Get access to the top healthcare and pharma stocks in the US market as the sector continues to lead globally in innovation and investment. With healthcare spending in the US projected to reach $7.7 trillion by 2032 (CMS.gov), the industry accounts for nearly 18% of US’ GDP. From gene therapies to AI-powered diagnostics, the space is witnessing rapid medical breakthroughs. For those looking to invest in US stocks from India, this guide highlights the leading players shaping the future of healthcare.
What are Pharma Stocks?
Pharma stocks are shares of companies that research, develop, manufacture, and market pharmaceutical drugs and related therapies. These companies are a major segment of the healthcare sector.
List of Best US Pharma Stocks
US Pharma Industry Overview
The Pharma & Healthcare sector can be broken down into several key categories, each with distinct leaders:
- Pharmaceutical Giants: Large, established companies with global reach, strong R&D pipelines, and blockbuster drugs. Eg. Eli Lilly (LLY), Johnson & Johnson (JNJ), AbbVie (ABBV), Bristol-Myers Squibb (BMY), Amgen (AMGN)
- Biotech Innovators: Companies developing breakthrough therapies, often targeting cancer, rare diseases, and infectious conditions. Eg. Vertex Pharmaceuticals (VRTX), Moderna (MRNA), Pfizer (PFE), Merck & Co. (MRK), Gilead Sciences (GILD), Regeneron Pharmaceuticals (REGN)
- Medical Devices & Equipment: Firms designing diagnostic tools, surgical systems, and advanced medical technologies. Eg. Intuitive Surgical (ISRG), Abbott Laboratories (ABT), Boston Scientific (BSX), Medtronic (MDT), Stryker (SYK)
- Healthcare Providers & Insurers: Companies offering health insurance, managing hospitals and clinics, and distributing medical supplies. Eg. UnitedHealth Group (UNH), CVS Health (CVS), HCA Healthcare (HCA), McKesson (MCK), Cigna Group (CI), Elevance Health (ELV)
- Healthcare Technology & Services: Players using software, AI, and data analytics to enhance care delivery and system efficiency. Eg. Teladoc Health (TDOC), Tempus AI (TEM), IQVIA (IQV)
Why Invest In US-listed Pharma Stocks?
The investment case for the healthcare sector is built on powerful, non-cyclical growth drivers:
- Demographic Tailwinds: Americans aged 65+ are projected to grow from 58 million in 2022 to 82 million by 2050, a 41% increase. By 2040, this age group is expected to make up about 22% of the US population. (Sources: U.S. Census Bureau, NCEA)
- Innovation: In 2023, PhRMA-member companies invested $96.0 billion in R&D. Global pharma R&D spending reached approximately $288 billion in 2024, a 1.5% year-over-year increase. (PhRMA, BioSpace)
- Defensive Characteristics: Healthcare demand is largely inelastic, making the sector more resilient during economic downturns. (U.S. Department of Health & Human Services, HHS)
- Pricing Power and Margins: Innovative, patent-protected drugs and medical devices typically carry high markups. Leading innovator firms often report gross margins above 70–80%, and top companies reinvest 19–28% of sales into R&D. (Roche Annual Report, PhRMA)
- Defensive Characteristics: Demand for healthcare is largely inelastic; people need medical care and medicines regardless of the economic cycle. This makes healthcare stocks "defensive," meaning they tend to be more resilient during economic downturns compared to cyclical sectors.
How to Invest in US Pharma Stocks from India
You can invest in US healthcare stocks from India by opening a US stock account on the INDmoney app and completing a quick digital KYC. Fund your account under the RBI’s Liberalised Remittance Scheme (LRS). Once funded, you can search and invest in leading healthcare stocks like Eli Lilly, UnitedHealth Group, and Intuitive Surgical, or explore healthcare-focused ETFs, all with the option to start small with just ₹100 using fractional shares.
Things To Consider Before Investing in US Pharma Stocks
- Patent Cliffs and Competition: Pharmaceutical companies rely on patents to protect their blockbuster drugs. When a patent expires, generic competition can cause sales to plummet by as much as 80-90% within a year.
- Clinical Trial Risk: The drug development process is long, expensive, and fraught with risk. A high percentage of drugs that enter clinical trials fail to gain regulatory approval, which can have a significant negative impact on a company's value, especially for smaller biotech firms.
- Regulatory and Political Pressure: The healthcare industry is subject to intense regulatory scrutiny from agencies like the FDA. Furthermore, drug pricing is a sensitive political issue in the U.S., and government efforts to control healthcare costs can impact company profitability.
- High Valuations: Due to their strong growth prospects and defensive qualities, many top-tier healthcare stocks often trade at premium valuations, requiring investors to be mindful of their entry point.
Frequently Asked Questions (FAQs) about Pharma Stocks:
Which pharma stock is best to invest in?
There’s no single “best” pharma stock, but leaders like Eli Lilly, Johnson & Johnson, Novo Nordisk and Pfizer stand out for strong pipelines, consistent earnings, and global reach. Your choice should align with your risk profile and investment horizon.
What are the top 5 pharma companies in the US?
The top 5 US pharma companies by market presence and innovation include Eli Lilly, Johnson & Johnson, Merck & Co., Pfizer, and AbbVie.
What is the difference between pharma and biotech stocks?
Pharmaceutical companies typically create medicines from chemical compounds, have large-scale manufacturing, and extensive sales forces. Biotechnology companies use living organisms or biological processes to create therapies and often focus on more complex, specialized diseases. While the lines are blurring, biotech stocks are generally considered to have higher risk and higher reward potential compared to their more established pharmaceutical counterparts.
When is a good time to invest in pharma stocks?
A good time to consider investing in pharma stocks is when you notice the healthcare sector is growing or when a company is about to release a promising new drug. Keep an eye on industry trends and news about drug approvals or breakthroughs.
Which US stocks are best to invest in?
The best US stocks to invest in can depend on factors like industry growth potential, company fundamentals, risk appetite, and investment goals. In healthcare, top US stocks include leaders like Eli Lilly (LLY) and UnitedHealth Group (UNH) etc.
Are pharma stocks risky?
Yes, pharma stocks can be risky because their success often hinges on drug approval processes, which are uncertain. Market volatility, legal challenges, and competition are other factors that can affect their performance. However, they can also offer significant rewards due to the high demand for healthcare products and services.
What should I look for in pharmaceutical stocks?
Look for companies with a strong pipeline of drugs in development, a good track record of getting drugs approved by regulatory bodies, and a solid financial foundation. It's also wise to consider companies that have a history of innovation and are well-positioned to meet current health needs.