We recently compiled a list of the 10 worst-performing healthcare stocks of 2024. In this article, we'll take a look at how Biogen, Inc. (NASDAQ:BIIB) stands compared to other healthcare stocks.
The healthcare industry continues to be an important and resilient sector driven by technological advances, increasing global demand, and an aging population. ReportLinker predicts that the healthcare services industry will grow from $7.5 trillion in 2022 to $7.975 trillion in 2023. It is expected to grow at a compound annual growth rate (CAGR) of 6.3%, or $9.8 trillion, through 2027. The global healthcare market is divided into several segments such as hospitals, digital health, and healthcare services. The hospital market alone is expected to grow 4.18% annually from 2024 to 2029, reaching a market value of $5.19 trillion.
According to a report released by the World Health Organization in December 2023, global health spending in 2021 reached a record high of $9.8 trillion (10.3% of global GDP). Spending is also unevenly distributed, leaving low-income countries increasingly reliant on health care. As government spending on health care declined, foreign aid became necessary. High-income countries spend about $4,000 per person on health care, but 11% of the world's population lives in countries that spend less than $50 per person. Even if public health spending increases during the coronavirus pandemic, this trend is unlikely to continue as countries grapple with high inflation, low growth, and rising debt.
National health spending is projected to reach an estimated $4.8 trillion in 2023 and grow at an annual rate of 5.6% from 2027 to 2032, according to the Centers for Medicare and Medicaid Services (CMS).
A patient-centric, technology-driven revolution is occurring in the healthcare industry. Thanks to the epidemic, telemedicine has become widely accepted. The global market is estimated to be worth $60.15 billion in 2023 and is projected to continue growing. The genomics-driven precision medicine market, which provides personalized treatments based on genetic makeup, is expected to reach $50.2 billion by 2028. AI is also revolutionizing healthcare, with $31.5 billion in equity funding raised from 2019 to 2022 and expected to save the U.S. $360 billion annually over the next five years. The global market for remote patient monitoring (RPM), valued at $71.9 billion in 2023, is expected to continue to expand thanks to wearable technology.
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Dr Bruce Aylward, WHO Assistant Director-General for Universal Health Coverage and Lifecourse, said:
“Sustained public financing of health care is urgently needed to move towards universal health coverage. It is especially important now as the world faces the climate crisis, conflict, and other complex emergencies. “People's health and well-being must be protected by resilient health systems that can withstand these shocks.”
The most worrying aspect of the healthcare industry is the impending collapse of the US healthcare system, especially in terms of labor shortages and financial instability. The medical industry is facing a serious talent shortage crisis. It is predicted that 124,000 more physicians will be needed by 2030 and 800,000 registered nurses (RNs) will retire by 2027. The current nurse turnover rate is a staggering 24%. This shortage has led some health systems to close critical patient services such as pediatrics, psychiatry, obstetrics, and ICUs.
Despite these challenges, the United States continues to spend nearly twice as much on health care as the OECD average, with worse outcomes on average. This disparity highlights the inefficiency and unsustainability of the current system. Additionally, 58% of hospitals' bad debts are due to insureds, further straining the revenue cycle and limiting funds available for clinical services. The combination of these factors paints a bleak picture for the future of the U.S. health care system. Without significant intervention and reform, the industry risks systemic collapse, with potentially far-reaching impacts on public health and the economy.
Our methodology uses a stock screener to select stocks with market capitalizations above $10 billion and evaluate their year-to-date (YTD) returns. We then identified the worst performing companies year-to-date as of November 11 and ranked them accordingly.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Patients undergoing physical therapy for neurological disorders.
Year-to-date total return: -26.75%
Biogen Inc. (NASDAQ:BIIB) is a biotechnology company developing treatments for neurological and neurodegenerative diseases, with a focus on diseases such as multiple sclerosis, Alzheimer's disease, Parkinson's disease, and spinal muscular atrophy. is. The company's main products are prescription drugs that target these diseases.
Biogen (NASDAQ: BIIB)'s Alzheimer's disease drug Requembi has been released later than expected, and the company is struggling to compete with drugs such as Eli Lilly's Kisunra. Analysts have questioned its market penetration and effectiveness, raising concerns about future earnings. Although Biogen's pipeline is seen as unexciting with limited innovative treatments, promising developments like felzaltamab for kidney transplant patients offer hope.
In the third quarter of 2024, Biogen, Inc. (NASDAQ:BIIB) reported sales of $2.5 billion, a decrease of 3% compared to the same quarter in 2023. This decline was due to poor performance in our core pharmaceutical revenue stream, which also declined 3%. . Although global revenue for the company's Alzheimer's disease drug Rekenbi increased 66% compared to Q2 2024, this growth was not enough to offset losses from other products and overall market expectations. That was enough.
Biogen, Inc. (NASDAQ:BIIB)'s third quarter non-GAAP diluted EPS was $4.08, down 6% from the prior-year period. Non-GAAP operating income increased 4%, primarily due to cost reduction measures rather than significant revenue growth. The company's focus on prioritizing research and development and improving efficiency has not translated into sustainable profitability or revenue growth, leading to concerns among investors about the long-term viability of the company's financial strategy. There is growing concern about this.
Analysts recently cut their outlook for Biogen, predicting limited growth support over the next year and suggesting the stock could remain flat until at least 2026. While some analysts maintain “moderate buy” ratings, the overall sentiment reflects caution due to the ongoing economic impact. Internal challenges and competitive environment.
Tracked by Insider Monkey database, 49 hedge fund holders held shares in the company in Q3 2024, with RA Capital Management being the largest with $229.5 million worth of shares. became a shareholder.
Overall, BIIB ranks 6th on our list of worst-performing healthcare stocks in 2024. While we acknowledge BIIB's potential as an investment, we believe AI stocks are more likely to deliver higher returns and do so in the short term. time frame. If you're looking for AI stocks that are more promising than BIIB but are trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks, According to BlackRock
Disclosure: None. This article was originally published on Insider Monkey.
