5 Biotech Stocks Worth Adding to Your Portfolio Now

The volatile biotech industry has done reasonably well so far in 2025 amid the ongoing tariff saga. Most pharma/biotech bigwigs are now investing heavily in manufacturing plants/operations in the United States as the Trump administration threatened of levying heavy tariffs on pharmaceutical imports (upto 250%) in a bid to boost domestic production. While the ongoing geopolitical tensions continue to be a headwind, given the continuous need for innovative medical treatments (regardless of the state of the economy), the dynamic biotech industry will continue to capture investors’ interest despite the uncertain macroeconomic environment.

2025 has seen a surge in mergers and acquisitions (M&A) after a lull in 2024, given the changing landscape and the spotlight on AI-driven drug discovery. Large pharma and biotech companies consistently seek to expand their product portfolios and pipelines through strategic collaborations and acquisitions to evolve their business models. Simultaneously, new drug approvals and rapid pipeline progress also maintain momentum amid a grim macro environment.

Biotech companies like Halozyme Therapeutics HALO, Akero Therapeutics AKRO, Kiniska Pharmaceuticals KNSA, ANI Pharmaceuticals ANIP, and Twist BioScience TWST are poised to outperform the sector in this volatile market environment. 
 

Industry Description

The Zacks Biomedical and Genetics industry comprises biopharmaceutical and biotechnology companies that develop high-profile drugs utilizing groundbreaking technology. These biologically processed drugs, which address virology, neuroscience, metabolism and rare diseases, are manufactured using live organisms.

As technology becomes increasingly crucial to improving global health, biotech companies strive to utilize innovative technologies to rapidly develop breakthrough treatments. Several companies in this field are developing drugs and vaccines utilizing modern technology. Given the dynamic and evolving nature of technology, the sector seems riskier than the large-cap pharma or drug industry.

4 Trends Shaping the Future of the Biotech Industry

Innovation and Execution Hold the Key: The primary focus in the biotech industry is on the performance of high-profile drugs and innovative pipeline development, as only a handful of companies in this industry have approved drugs in their portfolios. Most companies spend millions and billions of dollars to create a drug with path-breaking technology, resulting in significant research and development expenditures. The recent spotlight on the usage of AI technology for drug discovery will propel further investment in this industry. Precision medicine, also known as personalized medicine, is another rapidly evolving field in the industry.

On the other hand, successful commercialization is crucial for higher drug uptake, as smaller biotechsoften lack the necessary funds and expertise to reach the target population. This prompts collaboration deals with either pharma or biotech bigwigs, wherein sales are shared or royalties are received.

Sometimes, approved treatments come with side effects that emerge over time, and the uptake may fail to meet expectations. Hence, it takes several years before a biotech company turns profitable. Moreover, it may take quite a few years for any newly approved drug to contribute to its company’s top line.

M&A in the Spotlight: Consolidation has long been an area of focus in the pharma/biotech industry. This is because leading companies constantly look to diversify their revenue base in the face of dwindling sales of their high-profile drugs. The recent spree of acquisitions signifies a focus on portfolio expansion and constant pipeline innovation, given the changing landscape and spotlight on AI-driven drug discovery. Simultaneously, bigwigs in the space also enter into licensing deals and collaborations for a promising drug/candidate to strengthen and expand their portfolios in their respective core areas. While oncology and immuno-oncology companies have always been at the top of acquisition targets, the lucrative obesity sector and gene-editing space are also being eyed.

Swiss giant Roche recently announced that it will acquire 89bio, Inc. for $3.5 billion in a bid to augment its portfolio in cardiovascular, renal, and metabolic diseases. Another Swiss pharma bigwig Novartis, too, has been on an acquisition spree. Earlier this month, Novartis announced that it will acquire Tourmaline Bio, a New York-based, clinical-stage biopharmaceutical company, for $1.4 billion. Novartis had earlier acquired a clinical-stage biopharmaceutical company, Regulus Therapeutics, to strengthen its renal disease portfolio. Sanofi recently acquired Blueprint Medicines for $9.5 billion to expand its portfolio in rare immunological diseases.

The recent spotlight on the usage of AI technology for drug discovery should lure investment in this industry.

New Drug Approvals Boost Prospects: New drug approvals have accelerated in 2025 as most companies aim to diversify their portfolios.

Pipeline Setbacks & Potential Tariffs Weigh on Outlook: Pipeline setbacks are key deterrents for biotech companies, given the exorbitant cost of developing drugs using expensive technology. Most drugs/therapies take years to gain a regulatory nod. An unfavorable outcome from a crucial trial on a promising candidate is a huge setback, particularly for smaller biotechs, which are mostly one-trick ponies. The leading biotechsface other headwinds, including declining sales of high-profile drugs due to intensifying competition.

Many big pharma/biotech companies have sizeable production units outside the country and imposition of tariffs will increase their costs, thereby shrinking margins.

Zacks Industry Rank Indicates Decent Prospects

The group’s Zacks Industry Rank is basically the average of the Zacks Rank of all the member stocks.

The Zacks Biomedical and Genetics industry currently carries a Zacks Industry Rank #102, which places it among the top 41% of more than 246 Zacks industries. The rank reflects a decent outlook for the space, driven by consistent demand for improved medical drugs and treatments despite the challenging macroenvironment. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few biotech stocks that are well-positioned to beat the industry based on a strong portfolio/pipeline, let’s take a look at the industry’s stock market performance and current valuation.

Industry Versus S&P 500 & Sector

The Zacks Biomedical and Genetics industry is a 679-stock group within the broader Zacks Medical sector. It has outperformed the Zacks Medical sector but underperformed the S&P 500 composite sector year to date.

The stocks in this industry have gained 6% year to date against the Zacks Medical sector’s decline of 0.5%. The S&P 500 composite has gained 15.9% in the said time frame.

YTD Price Performance

Industry's Current Valuation

Since most companies in the biotech sector do not have approved drugs, valuing these becomes a complex process. On the basis of the trailing 12-month price-to-sales ratio (P/S TTM), which is commonly used for valuing biotech companies with approved portfolios of drugs, the industry is currently trading at 2.16X compared with the S&P 500’s 5.95X and the Zacks Medical sector's 2.40X.

Over the past five years, the industry has traded as high as 4.25X, as low as 1.83X and at a median of 2.64X, as depicted in the chart below.

5 Biotech Stocks Worth Buying

Halozyme Therapeutics has collaboration deals related to its ENHANZE technology with several large pharma companies that generate milestone payments, driving the top line. Robust demand for the subcutaneous formulation of DarzalexSc, Phesgo, and VyvgartHytrulois boosting royalties and the top line. The momentum is likely to continue in the upcoming quarters. Halozyme’s focus on signing new collaboration deals to aid growth bodes well.

HALO currently carries a Zacks Rank #1 (Strong Buy). 

The Zacks Consensus Estimate for 2025 EPS has increased 70 cents to $6.18 in the past 90 days. Shares of Halozyme have surged 63.8% year to date.

Price and Consensus: HALO

Kiniska Pharmaceuticals is focused on discovering, acquiring, developing and commercializing novel therapies for diseases with unmet need, with a focus on cardiovascular indications. The company continues to drive strong growth with Arcalyst, which was licensed from Regeneron in 2017. Arcalystis an interleukin-1α (“IL-1α”) and interleukin-1β (“IL-1β”) cytokine trap. Kiniska received FDA approval for Arcalyst in March 2021 for treating recurrent pericarditis and reducing the risk of recurrence in adults and children 12 years and older. Demand continues to be strong, driven by increases in the prescriber base and longer average total duration of treatment.

Shares of this Zacks Rank #1 company have skyrocketed 82.4%. The Zacks Consensus Estimate for 2025 EPS has increased 29 cents to $1.03 in the past 60 days. The consensus mark for 2026 EPS has also risen 41 cents to $1.60 in this time frame.

Price and Consensus: KNSA

ANI Pharmaceuticals is a diversified biopharmaceutical company developing, manufacturing, and marketing high-quality novel products in the areas of ophthalmology, rheumatology, nephrology, neurology, and pulmonology. The performance of Purified Cortrophin Gel has been strong on the back of a record number of new patient starts and new cases initiated.

The launch of Purified Cortrophin Gel has been strong on the back of a record number of new patient starts and new cases initiated. The acquisition of Alimera Sciences, Inc., in 2024 added a growing and durable franchise, Iluvien for (diabetic macular edema) and Yutiq (for the treatment of non-infectious uveitis affecting the posterior segment of the eye) to its portfolio. The company has a presence in the generics market as well.

ANIP’s shares have gained 73.6% so far this year. Earnings estimates for 2025 have risen 84 cents in the past 60 days. ANIP currently carries a Zacks Rank #1.

Price and Consensus: ANIP

Akero Therapeutics, a clinical-stage company, is developing transformational treatments for patients with serious metabolic diseases, including metabolic dysfunction-associated steatohepatitis (MASH). The company’s lead product candidate, efruxifermin (EFX), is currently being evaluated in three ongoing phase III studies: SYNCHRONY Histology in patients with pre-cirrhotic (F2-F3 fibrosis) MASH, SYNCHRONY Outcomes in patients with compensated cirrhosis (F4) due to MASH, and SYNCHRONY Real-World in patients with MASH or MASLD (metabolic dysfunction-associated steatotic liver disease). The successful development of efruxifermin will be a significant boost for the company.

The company currently carries a Zacks Rank #2 (Buy). Shares of AKRO surged 66.8% so far this year.

Price and Consensus: AKRO

Twist Biosciences, a synthetic biology, has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. The company leveraged its unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next-generation sequencing (NGS), sample preparation, and antibody libraries for drug discovery and development.

TWST has also expanded its arena beyond DNA synthesis to manufacture synthetic RNA as well as antibody proteins. It caters not only to the biotech and pharma industries but also to industrial chemical and agricultural companies, as well as academic labs.

This Zacks Rank #2 company recently collaborated with next-generation therapeutics company, Synthetic Design Lab, to support the development of novel antibody-drug conjugates for various cancer types.

Price and Consensus: TWST

Estimates for 2025 loss per share have narrowed to $1.25 from $2.17 in the past 60 days. However, estimates for 2026 loss per share have increased a cent.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research