We recently compiled a list of the 10 Best Performing Biotech Stocks in 2024. In this article, we are going to take a look at where Summit Therapeutics Inc. (NASDAQ:SMMT) stands against the other biotech stocks.
The biotechnology sector is expanding quickly due to rising demand for novel therapies, advancement in technology, and government assistance. New techniques are being made possible by advancements in fields like gene editing, sequencing, personalized medicine, and artificial intelligence, while the aging population and growing healthcare demands are driving a robust market for new treatments. Venture capital firms made approximately $52 billion in global investments in therapeutic-focused biotech companies between 2019 and 2021. Two-thirds of this sum was given to platform-tech start-up companies.
The worldwide biotechnology market was estimated to be valued at $1.38 trillion in 2023 and is projected to reach a valuation of approximately $4.25 trillion by 2033, growing at a compound annual growth rate (CAGR) of 11.8% from 2024 to 2024.
The U.S. biotechnology sector, in particular, was estimated to be worth $246.18 billion last year and is projected to reach about $830.31 billion at a compound annual growth rate (CAGR) of 11.6% from 2024 to 2034, according to previous research. The revenue proportion for Asia Pacific was 23.99%, whilst the revenue share for North America was 37.79%. The bioindustry application segment accounted for 24.33% of total revenue in 2023, while the biopharmacy segment held a 41.73% revenue share by application. For 2023, the tissue engineering and regeneration market is expected to account for 19.26% of total revenue.
Despite its potential, there are many risks associated with investing in biotech companies. With 90% of initiatives failing and drug development lasting more than ten years, the industry has a high failure rate. Businesses frequently face bankruptcy if they miss clinical trial endpoints or don't have enough money before launching a product. As a result of its significant risks and growth potential, biotech is commonly considered a "high-risk, high-reward" investment.
Biotech businesses have been further challenged by volatile market conditions, which have led several of them to reduce programs and lay off huge numbers of employees to save money. Although recent rate cuts may assist in resurrecting scientific initiatives, analysts like Jared Holz point out that it is still challenging to forecast their consequences. Holz also points out that the performance of biotech companies is increasingly matching that of small-cap stocks, indicating a change in market dynamics. Biotech may increase if small-cap stocks trade well, but stagnation could result from momentum loss. Interest rates and biotech success have a relatively recent relationship that emerged after the pandemic when enterprises with a therapeutic focus received a lot of investment.