Taking A More Active Role
The other ETFs in the pharma space make efforts to choose what they see as the most promising stocks in the sector. The PowerShares fund uses its Intellidex proprietary methodology to identify and rank stocks based on factors like value, quality, management actions, and momentum in the company’s earnings growth and stock price. More importantly for the fund’s performance recently, the PowerShares ETF also includes some names that you’d traditionally think of as being biotech stocks. That’s one reason why the fund has outperformed its peers even with a higher expense ratio of 0.56%.
Similarly, the VanEck ETF goes a bit further afield by including shares of drug distribution companies within its purview. It also includes international stocks in the sector, some of which have performed better over the past year than their U.S. peers. With an expense ratio of 0.40%, the VanEck fund tracks a more concentrated index of 25 stocks that encompasses not only pharmaceutical research and development but also production, marketing, and sales.
Whats Special About The Top Pharmaceutical Companies
The pharmaceutical industry is very old. All of the pharmaceutical stocks in this list date back to the 19th century or even earlier. Each of the companies has their successful products that are the leader in their field and bring them billions in sales every year.
Itâs unclear whether there is something about the US way of life that makes people consume more medicines than anywhere else, or itâs just the marketing, or a bit of both. Either way, the US is a very good environment for pharma companies to grow, which is why the price of their shares is likely to continue to grow.
Here’s A Simple Way To Get The Investment Exposure You Want
Healthcare stocks performed extremely strongly in 2017, rising more than 20% and providing much of the lift that the overall stock market saw last year. Among healthcare companies, many of those that focus on traditional pharmaceuticals lagged behind other parts of the healthcare sector, such as managed care. But going forward, many investors are optimistic that pharma stocks will catch up or even surpass the performance of other healthcare companies.
You can buy individual pharmaceutical stocks, but the danger there is that if you pick the wrong one, you could miss out on big gains if another company’s candidate drug turns out to be the newest industry blockbuster. Instead, choosing exchange-traded funds that focus on pharma stocks can be an easier way to profit from the space. You’ll find several pharma ETFs to help you get the exposure you want.
PowerShares Dynamic Pharmaceutical
iShares U.S. Pharmaceuticals
SPDR S& P Pharmaceuticals
VanEck Vectors Pharmaceutical
Data source: ETFdb.com.
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Choosing The Best Pharmaceutical Stocks
The top pharma companies have a few key characteristics in common. Knowing what to look for can help you identify the best investments.
The leading pharmaceutical companies generally increase their revenue and earnings on a consistent basis. Pharma companies must always contend with expiring patents and increasing competition, but the best companies have robust drug pipelines that more than offset any decreases in existing revenue streams.
The strength of a drug company’s pipeline is perhaps the most important factor. Although pharmaceutical companies have many drugs in various stages of development, most companies only publicize the development of a drug when it advances to clinical testing in humans or is awaiting regulatory approval.
Some clinical trials test new drugs, while others test existing drugs for new uses. The best pharmaceutical companies are adept at both developing new therapies and using existing drugs for new purposes.
The average cost of developing a new drug is $2.6 billion. The average elapsed time between drug discovery and regulatory approval is 10 years. But the payoff for developing an effective treatment, especially for a common ailment, can be massive. Owning an important patent can generate significant profits for a pharmaceutical company for many years, with little or no competition from other drugmakers.
Are Anip’s Insiders Buying Or Selling The Stock
In the past12 months, executives and large shareholders at ANIP have bought more shares than they have sold.
Stephen P. Carey, SENIOR VICE PRESIDENT AND CFO of ANIP, was the latest ANIP insider to sell. They sold$135,611.94 worth of ANIPstock on Apr 10, 2022.
Learn more about who owns ANIPshares here.
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Should You Invest In Pharmaceutical Companies
Since many pharmaceutical companies pay attractive dividends, these types of stocks are well-suited for income-focused investors. Another great reason to consider buying pharmaceutical stocks is that the U.S. population is aging. With the baby boom generation growing older, many more people in coming years are likely to need prescription medications.
Through A Biotech Etf
If you hate risk but love the upside biotechs offer, an ETF or other managed fund might be the best exposure to biotechs for you. The diversity of companies in the ETF is enough to safeguard the value of the fund. Yet, at the same time, movers and shakers will push the price higher. Consider it a basket of biotechs instead of a bet on any one single company.
With all types of biotech ETFs out there, youll have no trouble finding one that fits your investment niche. Some focus on gene editing and molecular treatments. Others focus on oncology. Some even track fundamentals to target growth biotechs, companies with Stage 3 trials or those that are already profitable. Choose the variables that fit your investing thesis and target a managed fund where someone else shoulders the responsibility of balancing risk and reward.
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Ajanta Pharma: Current Valuations Attractive
Elara said Ajanta Pharma has a discerning management, prudent fiscal discipline and a brand-driven business model. This, it said, is reflective in its historical performance, based on which the company has commanded premium valuations of nearly 30 times . “While historical growth has been superlative, we believe, current valuations are attractive as the stock is trading close to 36 per cent discount of its historic multiple. Traction in branded generic portfolios and improved utilization in Dahej and Guwahati plants may ensure that margins sustainwithin 31-32 per cent, going ahead,” it said.The brokerage has initiated coverage on the stock with a target of Rs 2,620, which at Wednesday’s price of Rs 1,752 suggests a potential 50 per cent potential upside.
Suven: Commercialisation Of New Molecules On Cards
Suven will benefit from increased volumes of commercial products, new molecule additions in the CDMO division and the launch of 3-4 formulation products per year. The company is also forward integrating in manufacturing of advanced intermediates, APIs and formulations, which will be long-term growth catalysts.”We expect Suven to post revenue/Ebitda/PAT CAGRs of 27 per cent/29 per cent/26 per cent in the next three years. At CMP, the stock trades at 22x FY24E P/E, at a discount of 20 per cent when compared with other CRAMS players. We initiate with Buy and Rs 725 target price,” it said.At Wednesday’s price of Rs 577.50, the target suggests a potential 26 per cent upside.
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Investing In The Pharmaceutical Industry
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The pharmaceutical industry, with more than $1.2 trillion in global sales a year, offers many opportunities for investors. Some pharma stocks come with good dividends, while others have potential for significant growth. Investing in pharmaceuticals not only has upside but helps expand health care for people around the world.
But as with any industry, pharmaceutical stocks have risks, and investors would be wise to research each company before they buy stock.
Here is key information about the industry and some ways to find pharmaceutical stocks.
Investing In Healthcare Stocks After Covid
Healthcare conversations over the past two years have focused almost exclusively on COVID-19. Yet the dynamic and diverse sector offers a lot more to talk about. BlackRocks Erin Xie and Eli Lilly CEO David Ricks did just that in a recent Expert-to-Expert dialogue.
The response from pharmaceutical companies to the COVID-19 pandemic was epic. But has it distracted from or amplified the broader opportunities and innovation within the healthcare sector?
In the most recent Expert-to-Expert video, Dr. Erin Xie, lead portfolio manager of the BlackRock Health Sciences Opportunities Fund, and David Ricks, CEO of pharmaceutical company Eli Lilly, discuss the future of healthcare after COVID, the question of regulation, and whether dented valuations present a buying opportunity.
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Why Invest In Pharma Stocks
Sitting in the healthcare sector, pharma stocks have been long known for their defensive qualities. Namely they produce products which are in constant demand as the need for healthcare and pharmaceuticals does not subside. Put simply, people will always be sick and in need of care.
However, the important thing to consider is size. Nicholas Hyett, an equity analyst at Hargreaves Lansdown, notes it is expensive being a drug maker. This is because enormous research and development costs go into each new therapy, and many never make it to pharmacy shelves.
Having drugs already on the market generating the cash needed to support the expensive development process is a big bonus, he says. For that reason, the industrys largest, best funded, players tend to be safer than some of the upstart biotech stocks that frequently make headlines.
At the same time, the large drug makers are generally well-known for dividend payments. As a result, so they are often of interest to dividend investors, or to anyone looking to find long-term gains with lower risk than other stocks.
Is Anip Stock Undervalued Or Overvalued
You can use a variety of different financial metrics, analyses, models, and charts to gauge ANIP’s intrinsic value.
Using relative valuations measures:
- ANIP may be undervalued based on its P/B ratio of 1.84x, relative to Drug Manufacturers – Specialty & Generic industry P/B ratio of 1.98x
You can doadditional valuation research on ANIP’s stock here.
Takeda Pharmaceutical Co Ltd
- Dividend yield: 5.3%
Japan’s Takeda Pharmaceutical is a bit of an oddball on this list for a few reasons. In addition to being an international play, TAK’s business is mainly generic drugs instead of branded pharmaceutical products that can sell for a higher margin. Furthermore, it’s a bit smaller at about $48 billion in market value.
However, TAK stock is worth considering because it may be even more solid of an income investment than others on this list because there’s a much smaller long-term threat of patent expirations.
From a yield perspective, Takeda is among the most generous dividend stocks in the sector, providing a steady stream of cash regardless of share price movement. Throw in an uptrend for shares when the rest of Wall Street has struggled, and this pharma stock stands up to scrutiny.
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Is Alny Stock Undervalued Or Overvalued
You can use many financial metrics, analyses, models, and charts to gauge ALNY’s intrinsic value.
Using relative valuations measures:
- ALNY may be overvalued based on its P/B ratio of 96.84x, relative to Biotechnology industry P/B ratio of 4.58x
You can accessmore valuation research on ALNY’s stock here.
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An Intro To The Pharmaceutical Industry
Pharmaceutical companies research, develop, make, and sell medications, including preventive medicines, treatments, and vaccines.
Two segments of therapeutics make up the industry: pharmaceuticals and biologics. Its also important to know the difference between pharmaceutical stocks and biotech stocks.
Pharmaceutical drugs are tablets or pills made out of synthetic or plant-based chemicals. Because they are small and fairly easy to make, companies can produce hundreds of thousands of them. When drugs are first approved, they generally have a patent or market exclusivity, meaning that only the pharma company that developed them can manufacture and sell the drugs.
Once the patent or exclusivity ends, other companies can create generic forms of the drug and begin to compete with the pharma company. The generic drugs are chemical copies of the original drug but sell at lower prices, making it hard for the original pharma company to compete. This can lead to its stock losing value.
Biologics are products such as vaccines, gene therapies, and medications for blood disorders that are large, protein-based molecules made out of living cells. Biologics are more complex to manufacture, one reason that makes them more expensive.
Biotech companies use bacteria, enzymes, and other living organisms to develop drugs.
Pharmaceutical companies make drugs using chemicals, which may be synthetic or plant-based.
Investing In Pharmaceutical Stocks: Biggest Treatment Areas And Trends
According to Research and Markets, by 2025 the global pharmaceutical market is expected to be worth US$1.7 trillion. Medical Marketing and Media states that there are currently a number of promising drugs in the big pharma pipeline in the fields of oncology, neurology, immunology and gene therapy.
Oncology tops the list of the biggest therapeutic markets for drug sales. Drug sales for diabetes and autoimmune disease therapies are also experiencing significant growth. The most notable drugs coming down the oncology pike are focused on multiple myeloma and solid tumors. Johnson & Johnson and Legend Biotechs CAR-T therapy Cilta-cel is targeting multiple myeloma, Bristol Myers Squibbs Deucravacitinib has shown excellent results in treating psoriasis and Iovance Biotherapeutics is expected to seek approval for Lifileucel, a cell therapy targeting solid tumors.
Gene editing, including CRISPR technology, is also gaining ground in the pharmaceutical market. A from Business Research Company projects that the global CRISPR technology market will grow from US$1.65 billion in 2021 to US$3.11 billion by 2026.
While niche drugs from top pharmaceutical companies are creating investment opportunities, policy around drug prices remains a hot topic. A few years ago, former FDA Commissioner Scott Gottlieb put the agency on a crusade to lower drug prices by inciting competition between pharma companies.
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Risks Of Investing In Pharmaceuticals
Pharmaceutical stocks present a potentially lucrative investment opportunity but carry significant risks, including competition from generic drugmakers, product patent expirations and the substantial cost of research and development .
Its estimated that pharmaceutical companies spend approximately 20% of their revenue on research and development. In fact, in 2018, US companies spent a collective $80 billion on R& D, according to Statista. What makes this expense especially unpalatable is the risk drug companies face in having their products rejected by regulatory authorities like the US Food and Drug Association . A company could spend millions researching and developing a product, only to have it rejected by the FDA.
Pharma companies also face steep competition from generic drugmakers attempting to undercut brand-name products with cheaper alternatives especially for drugs with patent expirations on the horizon.
The industry is far from foolproof, and while pharma stocks could be a potentially profitable addition to your portfolio, make sure you understand the risks involved before you invest.
How has COVID-19 affected pharmaceutical stocks?
Theres money to be made from selling a COVID-19 vaccine, but analysts warn that as more drug companies enter late-stage trials, the number of viable vaccine candidates will grow and no single manufacturer will be able to monopolize vaccine sales.
Investing In Pharmaceutical Companies: What’s Ahead
Moving forward, the pharmaceutical sector is bound to evolve. Despite reliance on trusted methods and practices, progression is natural, especially in a market as forward-looking as much as this one. Companies big and small in this area of the health sector are finding new and innovative ways to stay relevant, often by changing focus.
As part of its Top Health Industry Issues 2021 report, PWC points to several trends that are reshaping the medical space:
- Virtual health is reshaping healthcare delivery, with 95 percent of large US employers now covering telehealth, up from 56 percent in 2016.
- Clinical trials are changing for the better with the help of virtual technology as 98 percent of pharma and life sciences executives surveyed said they expect to increase digital investments in clinical trials.
- Digital tools are seen as improving efficiencies and patient relationships for physicians.
- Health executives expect their organizations to invest more in predictive modeling as a part of strategic planning.
- The pharma sector is expected to see more investment in vaccines with interest in pre-pandemic growth areas.
- Improving data analytics technology may help pharma companies to refine trial protocols that serve more diverse populations.
Although they are high-risk stocks from the get-go, investors can look to pharmaceutical companies for long-term returns. Pharmaceutical exchange-traded funds also exist as a way for investors to introduce themselves to the market or watch trends.
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Fastest Growing Biotech Stocks
These are the top biotech stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year percentage revenue growth and most recent quarterly YOY earnings-per-share growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter that may make one figure or the other unrepresentative of the business in general. Due to the nature of biotech business models, especially early on, earnings and revenue can undergo large growth spurts when a deal is made or a drug is approved, so we are not excluding outliers with growth of over 2,500% as we typically do.
|Fastest Growing Biotech Stocks|
These are the biotech stocks with the highest total return over the last 12 months.
|Biotech Stocks with the Most Momentum|