The pharmaceutical market is expected to increase in value, meaning there are plenty of opportunities for investing in pharmaceutical stocks. Market participants seeking portfolio diversification may want to consider pharmaceutical stocks.
Despite a reputation for being high risk, pharmaceutical companies can be compelling for long-term investors. With the possibility of patented entry into new areas of treatment, the pharmaceutical industry can present profitable opportunities for those who do their research.
To better answer investors asking the question, “Why should I consider investing in pharmaceutical stocks?” here the Investing News Network looks at how drugs are approved in the pharma industry, the treatment trends in healthcare and the industry’s future growth.
The US Food and Drug Administration (FDA) is the regulatory agency behind all of the medicines that get approved for commercial availability in the US. The FDA’s Center for Drug Evaluation and Research (CDER) does the job of assessing each product before it is sold on the market. Before selling these products, drug companies are required by the FDA to test them. Results from drug candidates are sent to CDER to indicate safety, efficacy and intended use.
A green light from the agency means that CDER has reviewed the drug’s effects and that the positives outweigh the negatives. There are several approval processes that take place, including analyzing the disease the drug is targeting, looking at other treatment options, reviewing positives and negatives from clinical trials and examining how to manage any risks associated with the product.
However, FDA approval in the healthcare sector can take years. Once a new therapy is developed by a drug company, it generally goes through three years of laboratory testing before the FDA even receives an application. Once approved, drugs then go through the clinical trial phases.
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 (NYSE:JNJ) and Legend Biotech’s (NASDAQ:LEGN) CAR-T therapy Cilta-cel is targeting multiple myeloma, Bristol Myers Squibb’s (NYSE:BMY) Deucravacitinib has shown excellent results in treating psoriasis and Iovance Biotherapeutics (NASDAQ:IOVA) 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 market report 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.
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