The stocks of pharmaceutical companies are termed as Pharma stocks. With the rapid growth and advancement in science and technology, Pharma companies and their stocks have become one of the most attractive opportunities for investment.
The pharmaceutical sector is a sub-sector under the healthcare sector. It is specifically related to researching, developing, manufacturing, and selling of medicines and drugs. The drugs and medicines can be generic or directed towards specific ailments. Overall, global sales for the top ten therapeutic areas in the Pharma sector reached $36 billion in 2018.
Therefore, Pharma stocks are significant high-risk high-reward avenues of investment for investors looking for both long-term gains and short-term dividend payments.
Factors to Consider Before Investing in Pharma Stocks
The most critical factor to consider before investing in Pharma stocks is that the success or failure of any Pharma company and its stock relies on the success or failure of its drugs. Every drug needs to be approved by the US Food and Drug Administration (FDA) before it becomes commercially available.
Therefore, investors must perform extensive research before investing in Pharma stocks, especially at the clinical trial stage. The clinical trial stage is what makes or breaks a Pharma company and its stock. Successful clinical trials lead to colossal market gains while the failures hold the potential to wreck the entire company in one go.
Pharma stocks are highly volatile and are subject to very high risks. However, for investors open to taking big risks, Pharma stocks can generate massive returns if the risks pay off well.
Which Pharma Stocks Should I Buy?
Numerous Pharma stocks trade on the US stock exchanges. Among the top-performing Pharma stocks, we have compiled a list of the best Pharma stocks for you to select from.
Investors can invest in well-established Pharma companies that have stable track records of successful clinical trials, innovations, and continuous research & development. At the same time, investors can also invest in Pharma stocks of small and new entrants to the market that holds strong potential to disrupt the market with their innovations and novelty.