5 Small Drug Stocks to Add to Your Kitty in the Trump 2.0 Era

Core Viewpoint - The biotech industry has faced challenges since Donald Trump's election, primarily due to regulatory changes and macroeconomic pressures, but there are signs of recovery and innovation within the Zacks Medical-Drugs industry, which is expected to see increased M&A activity and pipeline successes in the future [1][2][3]. Industry Overview - The Zacks Medical-Drugs industry consists of small to medium-sized drug companies that produce medicines for human and veterinary use, often relying on a limited portfolio of marketed drugs or single pipeline candidates for revenue [4]. - These companies typically depend on collaboration with larger drugmakers for revenue, highlighting the importance of partnerships and external funding for R&D activities [4][6]. Factors Influencing the Industry - Pipeline Success: The success of key pipeline candidates in clinical studies is crucial for stock price movements, with successful innovations acting as catalysts [5]. - Collaboration: Strong partnerships with larger drugmakers signal potential growth for smaller companies, especially when equity investments are involved [6]. - Technological Investment: Smaller companies must adopt innovative business models and invest in new technologies, including personalized medicines and health IT, to thrive in a changing market [7]. Current Industry Performance - The Zacks Medical-Drugs industry has underperformed compared to the S&P 500 and the broader medical sector, with a collective decline of 7.1% over the past year, while the S&P 500 rose by 24.5% [11]. - The industry currently has a trailing 12-month price-to-sales ratio of 1.94, significantly lower than the S&P 500's 5.79 and the Zacks Medical sector's 3.35 [12]. Notable Companies and Their Performance - Amneal Pharmaceuticals: Experienced a stock increase of 55.7% over the past year, driven by strong revenue growth across its business segments [15]. - Corcept Therapeutics: Achieved a remarkable stock rise of 223.2% in the past year, supported by strong demand for its marketed drug and promising pipeline candidates [18]. - Nektar Therapeutics: Stock surged by 244.8% in the past year, with ongoing clinical studies expected to yield significant data in 2025 [22]. - Cardiol Therapeutics: Stock increased by 19.3% in the past year, with positive data from clinical studies leading to expectations for further development [24]. - Dyne Therapeutics: Despite a stock decline of 35.9% in the past year, the company is advancing its clinical studies for serious muscle diseases [27].