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Warren Buffett is Buying These 4 Pharmaceutical Stocks, Should You?

Stock Markets Aug 13, 2021 05:30PM ET
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© Reuters. Warren Buffett is Buying These 4 Pharmaceutical Stocks, Should You?

The pharmaceutical industry is undoubtedly playing a vital role in battling the COVID-19 pandemic. Many pharma companies are delivering huge gains thanks to the heightened demand for their COVID-19-related products. And because the pandemic is nowhere near defeated, Warren Buffett is betting on major pharma stocks Pfizer (PFE), AbbVie (ABBV), Merck & Co. (MRK), and Bristol-Myers (BMY). So, let’s find out if it’s worth emulating the legendary investor.Known as the “Oracle (NYSE:ORCL) of Omaha,” Warren Buffett is one of the most successful investors ever, Buffett’s Berkshire Hathaway (NYSE:BRKa) (BRK.A) recovered all of its pandemic-driven losses in the second quarter of 2021 to hit a record high. BRK.A’s operating income rose 21% year-over-year to $6.69 billion in the second quarter, while its equity investments rose 6.8% from the prior-year quarter to $28 billion. Shares of BRK.A have gained 36.4% over the past year and 25.5% year-to-date, outperforming the broader S&P 500 index’s 32.2% gains and 18.8% returns, respectively.

Buffett has a substantial stake in the pharmaceutical industry. He invested billions of dollars in big pharma stocks last year. The shares of pharma companies rallied powerfully last year on increased demand for therapeutic drugs, supplements, and other remedial needs for COVID-19. According to Statista, approximately $1.27 trillion was spent on medicines in 2020, up from just $887 billion in 2010.

As of September 2020, Berkshire Hathaway had invested $136 million in Pfizer Inc. (NYSE:PFE) and more than $1.8 billion each in AbbVie Inc . (NYSE:ABBV), Merck & Co., Inc. (MRK), and Bristol-Myers Squibb Company (NYSE:BMY). And the renowned investor’s long-term value investing strategy paid off because these stocks gained significantly. Considering their solid market position and sound financials, we think these four pharma stocks could still be worth buying.

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Warren Buffett is Buying These 4 Pharmaceutical Stocks, Should You?
 

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