Investing in Pharmaceutical Companies
After the announcement of Lockdown, the interest in Stock trading has risen manifold. With the nature of pandemic and the need for medicinal drugs and vaccine, the Pharma sector is working day in and day out.The most important question remains; whether this is a good time to invest in Pharma stocks. Before jumping on to the pros and cons, let’s look at the basic stages of approval and types of therapies that are seeking more attention now. Oncologics, pain therapy and anti-diabetics are some of the top global drugs in terms of revenue, and over the course of the year, treatments for non-small cell lung cancer and breast cancer were the top diseases for which therapeutic drugs were being developed.
Target audience for these drugs are generally the very young, the very old and the diseased. Thus, these pharmaceutical companies have an assured user base in comparison to other sectors. The most important thing to remember is that once these companies come up with the drug, it has to go through various stages of approval. These approvals are possibly the most attractive in pharmaceutical stocks investment opportunities. They are always on the investor’s radar. New drugs are critical for the market, especially when it gets to rare diseases. The auspicious results can reach big gains in the stock market, but failures or loss of progress can have a reverse impact.Another good factor to note would be the patent which in India is given for a minimum period of 20 years.
Getting a patent would mean monopoly over the drug and hence attractive and growing stock prices for the company. The duration of the patent, the research was done by the competitors, the effectiveness of the drug, and the intensity of the disease have an unimaginable impact on the stock prices. This sector is a high-risk center as the effect of a drug can make or break the game. Yet, in the long term, it is a good opportunity for investors to diversify their portfolio. The global pharmaceutical market is ready for outstanding growth. Big and famous brands are always interesting but small and micro-cap stocks are good too.
According to many reports, the industry reached $1.2 trillion in 2018, up to $100 billion from 2017. In the next 4 years, the market is predicted to grow at a compound annual growth rate between 4% and 5% and to reach $1.3 trillion. But this rate is less than between 2014 and 2018. In the next 5 years, the sales volume in the pharmaceutical market is possible to reach $1.18 trillion. It looks like agreat opportunity.
Nevertheless, investing in pharmaceutical stocks could be a good addition to everyone’s portfolio. You don’t have to invest in leading pharmaceutical stocks,some are not as big as leaders but have great growth potential. And, they are cheaper, also. Overall, with speedier drug approvals, an ever-increasing customer base and many rising sectors, investing in pharmaceutical stocks could be a good move
