5 Biotech Stocks to Watch for Potential Upside

Industry Overview - The biotech industry has shown strong performance in 2025 despite a challenging macroeconomic environment, driven by new drug approvals and pipeline progress [1] - Mergers and acquisitions (M&A) surged in 2025, with large pharmaceutical and biotech companies expanding their portfolios through strategic collaborations and acquisitions [2] - The Zacks Biomedical and Genetics industry has outperformed both the Zacks Medical sector and the S&P 500, gaining 22.1% in the last six months compared to 12.5% and 16.5% respectively [18] Key Trends - Innovation and execution are critical, with a focus on high-profile drugs and innovative pipeline development, particularly with the rise of AI technology in drug discovery [6] - Successful commercialization is essential for drug uptake, often requiring collaborations with larger firms due to funding and expertise limitations of smaller biotechs [7] - Pipeline setbacks and potential tariffs pose challenges, as drug development is costly and time-consuming, with many drugs taking years to gain regulatory approval [13][14] Notable Companies - Amicus Therapeutics (FOLD) has performed well, with its lead drug Galafold showing strong demand and recent FDA approval for Pombiliti + Opfolda boosting its portfolio [24] - ANI Pharmaceuticals (ANIP) has seen significant growth in its rare disease franchise, with sales of its ACTH-based injection Cortrophin Gel surging 70% year-over-year [28] - Arcutis Biotherapeutics (ARQT) is focused on treating inflammatory skin diseases, with its lead product Zoryve performing well and expanding its label [32] - Tango Therapeutics is developing precision medicine for oncology, with promising data from its ongoing studies [36] - Pacira BioSciences (PCRX) maintains momentum with its lead drug Exparel and is looking to expand its label further [38]