5 Small Drug Stocks to Buy as Tariff-Related Uncertainty Looms

Industry Overview - The biotech industry is facing pressure due to global uncertainties, particularly from the tariff war, which may target pharmaceuticals in future rounds [1] - 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 [4] Current Trends - Despite challenges, the Zacks Medical-Drugs industry is showing promising trends due to positive pipeline news and regulatory successes, with expectations for increased innovation and M&A activity [3] - The industry has outperformed the S&P 500 but slightly underperformed the Zacks Medical sector, with a year-to-date decline of 7.3% compared to the S&P 500's decline of 12.3% [11] Key Factors Influencing the Industry - Pipeline success is crucial, as the outcomes of clinical studies can significantly impact stock prices [5] - Strong collaboration with larger drugmakers is a positive indicator for small pharma companies, with M&A activity signaling growth [6] - Investment in technology and personalized medicine is essential for smaller companies to adapt to the evolving healthcare landscape [7] Company Highlights - Heron Therapeutics: Key drug Zynrelef saw a 44.1% sales increase in 2024, with expectations for transformational growth in 2025. The stock has risen 40.5% year-to-date [17][18] - Esperion Therapeutics: The company has two approved drugs with improving prescription trends, although its stock has declined 57.7% year-to-date [21][22] - Pyxis Oncology: Focused on next-generation cancer therapeutics, the stock has declined 34.6% year-to-date, but the consensus estimate for 2025 losses has narrowed [24][26] - Plus Therapeutics: Developing targeted radiotherapeutics for CNS cancers, the stock has declined 31.5% year-to-date, with improving loss estimates for 2025 [28][30] - Aurinia Pharmaceuticals: The company reported a 36% sales growth for Lupkynis in 2024, with ongoing studies for expanded patient populations. The stock has declined 12.1% year-to-date [32][33]