Investing in the Future of Healthcare: Why You Should Keep an Eye on Health-Related Startups and Stocks

Neeraj Singh Shekhawat Neeraj Singh Shekhawat
Jan 5, 2023 4 min read
Investing in the Future of Healthcare: Why You Should Keep an Eye on Health-Related Startups and Stocks

Investing in pharmaceutical stocks has become increasingly popular in recent years. The pharma sector continues to grow at a rapid pace. With the UK boasting a number of strong pharmaceutical companies, there are plenty of options for investors looking to make a long-term commitment. Here are 3 UK Pharma stocks I’d buy to get rich in 10 years:

1. AbbVie (NYSE: ABBV)

AbbVie is a leading global biopharmaceutical company that specialises in a range of therapeutic areas including oncology, immunology, neuroscience, and virology. AbbVie’s blockbuster drug Humira is a top-seller, and the company expects to profit significantly from its anti-inflammatory drugs Rinvoq and Skyrizi. AbbVie’s pipeline includes 20 different programs in phase 3 testing, making it a great long-term investment.

2. Bristol Myers Squibb (NYSE: BMY)

Bristol Myers Squibb is a leading global biopharmaceutical company that specialises in a range of therapeutic areas including oncology, immunology, and cardiovascular disease. BMS is conducting more than 50 clinical testing programs and recently won approval in the US for two cell therapies. It also manufactures Reblozyl, which treats anaemia in patients with blood disorders and myelodysplastic syndromes.

3. Celadon Pharmaceuticals Plc (AIM: CEL)

Celadon Pharmaceuticals Plc is a UK-based pharmaceutical company with a primary focus on growing indoor hydroponic high-quality cannabis for use in approved medicines. The company is committed to improving quality of life by researching and manufacturing cannabinoids for use in approved medicines with an initial focus on chronic pain. The company also has a majority stake in LVL Health, a chronic pain clinic, alongside a minority stake in cannabinoid-based biopharmaceutical company Kingdom Therapeutics. This provides Celadon with a direct inroad into its target chronic pain market, making it a great long-term investment.

Investing in pharmaceutical stocks can be a lucrative and rewarding long-term commitment. I would be particular keen on investing in Celadon Pharmaceuticals PLC due to the company’s involvement in the legalisation of cannabis. CBD is a huge market as it is, and with the new data being provided to the regulating bodies, the stigma surrounding cannabis will soon be cleared for a lot of people.

Why pharmaceutical stocks?

Pharmaceutical stocks are attractive to investors for a few reasons.

1. Demand

The demand for pharmaceuticals is relatively constant and has been for the past decades. People will always need medication to treat illnesses and diseases, and as the population continues to grow and age, the demand for pharmaceuticals is likely to increase. Additionally, the pharmaceutical industry is highly research-driven, and companies are constantly working to develop new drugs to treat illnesses and diseases. This means that pharmaceutical companies are able to charge premium prices for their products and generate high profit margins.

2. Regulation

Furthermore, the pharmaceutical industry is also highly regulated – and for good reason.

This provides a great level of stability for investors, as companies must go through a rigorous approval process (FDA) before they can bring a new drug to market. This helps to ensure that only safe and effective drugs are available to patients while providing investors with a prospective reflection on the companies potential ROI on a new drug.

3. The Pipeline

In addition, one of the key factors to consider when investing in pharmaceutical stocks is the strength of the company’s pipeline. What does that mean?

Well, a strong pipeline of new drugs in development increases the chances of potential growth, as the company will be able to generate revenue from new drugs and medications they bring to the market. Additionally, companies with a diversified pipeline are less likely to experience significant drops in revenue if one drug in their portfolio loses patent protection or is not as successful as expected.

What about risk factors?

As with any investment, there is a certain risk involved.

Aside from traditional risks that come with an investment into stocks, here are a few more risk factors that apply to pharma companies specifically.

1. Regulatory Issues

One of the key factors in the success of a drug is whether it will be approved by regulatory bodies, such as the FDA or EMA.  There's always the possibility that a new drug in development may not be approved, which can cause significant delays or even the failure of the product.

2. Patent Issues

When a drug's patent expires, other companies can begin manufacturing and selling generic versions of the drug, which can significantly reduce the original company's revenue as many tend to outsource this to the middle east or India. This can in turn have a major impact on a company's profits and overall financial stability.

3. Adverse Events

Certain drugs can have unexpected side effects, and when it's the case, the drug may be withdrawn from the market, leading to significant financial losses for the company, and reputational damage or even law suits.

4. Competitions and Innovation

New competitors and advances in technology can make a company's products obsolete and lead to a decline in revenue and profits. Especially the biotechnology sectors has seen rapid growth in the past years. Biotechnology and genetic engineering have allowed for the production of highly targeted and personalized therapies, such as monoclonal antibodies and gene therapies, which have the potential to further revolutionize the treatment of various diseases.

Consider these risk factors before you ultimately decide whether to invest into a stock or not.

Conclusion

Overall, investing in a few promising pharmaceutical stocks can be a great long-term commitment, as the demand for pharmaceuticals is relatively constant and the companies are constantly researching and developing new drugs.

The above-mentioned companies, namely AbbVie, Bristol Myers Squibb and Celadon Pharmaceuticals Plc are great options for explore if you’re looking to make a long-term commitment by investing into the the pharmaceutical industry.

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