Drug companies are companies that develop, manufacture, and market pharmaceutical drugs.
The major drug companies are more speculative than most investors realize. They need a continuing flow of successful new products to maintain their earnings. They face increasing litigation and aggressive competition from generics as drugs come off patent. Unlike tech stocks, they have formidable regulatory burdens, and unlike other manufacturing stocks such as, say, auto companies, they do not benefit from customer loyalty.
The general view on these stocks seems to be that they are can’t-miss investments because the baby boomers are reaching an age when they will need drugs for a number of medical conditions, and are willing to pay for them.
Drug companies need to spend heavily to create new drugs, and spend even more to gain regulatory approval. Even then, they only get to profit for a limited time before patents run out and generic products appear. Then too, their research spending may lead to dead ends, rather than new drugs that fill a need and can overcome the regulatory hurdles.
If you want to invest in drug companies, we think you should focus on those that have high cash holdings and a number of drugs in the pipeline. And all the better if they have access to fast-growing markets, like China, India and Latin America.
Drug companies may have a place in your portfolio, and at TSI Network, we recommend using our three-part Successful Investor philosophy to decide how:
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Concordia Healthcare Corp., $38.72, symbol CXR on Toronto (Shares outstanding: 51.0 million; Market cap: $1.9 billion; www.concordiarx.com), is an Oakville, Ontario-based company that acquires and sells the rights to established drug treatments, mainly in the U.S.
Concordia aims to control the rights to relatively small, mature… Read More
Drug stocks can offer lots of potential for investor profit—but there are three major hurdles most drug makers face.
Investors often comment that we sometimes differ with the mainstream view on which stocks make good investments. That’s especially true with drug stocks.
The… Read More
Today we report on a Canadian pharmaceutical firm that does not develop any drugs itself. Instead, Merus Labs acquires the rights to existing drugs and outsources manufacturing and other operations. The company purchases the right to smaller, established drugs rather than… Read More
Merus Labs International Ltd., $1.97, symbol MSL on Toronto (Shares outstanding: 102.3 million; Market cap: $201.5 million; www.meruslabs.com), is a Toronto-based company that acquires the rights to established drugs.
Merus mainly targets relatively small, mature products, as opposed to the newer… Read More
Concordia Healthcare, $64.13, symbol CXR on Toronto (Shares outstanding: 28.9 million; Market cap: $1.9 billion; www.concordiarx.com), is an Oakville, Ontario-based drug company that acquires and sells established drugs, mainly in the U.S.
The company aims to acquire the rights to relatively small, mature products as opposed… Read More
Pat McKeough responds to many requests from members of his Inner Circle for specific tips on stock investing as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go… Read More
Concordia Health Care, $46.76, symbol CXR on Toronto (Shares outstanding: 28.9 million; Market cap: $1.3 billion; www.concordiarx.com), is an Oakville, Ontario-based specialty pharmaceutical company that acquires and sells established drugs, mainly in the U.S.
The company aims to acquire the rights to relatively small, mature products… Read More
The growing trend toward marijuana legalization has spurred a great deal of investor interest. (It has inspired a number of legitimate marijuana start-ups, as well as a variety of “pump & dump” operations—see above). We have yet to come across any attractive marijuana investments.
Tweed Marijuana… Read More
Photon Control, $0.46, symbol PHO on Toronto (Shares outstanding: 101.7 million; Market cap: $46.3 million; www.photon-control.com), designs, makes and distributes a wide range of optical sensors and instruments to measure temperature, pressure, position and flow.
Original equipment makers and other customers in the semiconductor, oil and… Read More
Pat McKeough responds to many requests from members of his Inner Circle for specific advice about stock picks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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