Everybody has troubles. If you don’t believe me, just ask them. Among the troubles some people have are chronic or acute medical conditions.
A list of these might include the following:
• Neuromuscular: Parkinsons, Multiple Sclerosis, Alzheimers, Spinal Muscle Atrophy, neuropathic pain.
• Inflammatory: Crohn’s Disease, IBD, rheumatoid arthritis, lupus, pulmonary fibrosis, liver diseases.
• Dozens of forms of cancer, leukemia and other blood diseases.
These conditions have one thing in common. Each one is the target of one or more drug therapies currently in the research pipeline of three established biotechnology companies. These firms seek to discover, develop, manufacture and distribute innovative therapies for people with serious medical problems.
Importantly for us, these three firms are already profitably engaged in the business of distributing past discoveries. The research pipeline represents both hope for people with problems and potential future business. Stock in these firms is trading at below-market multiples of earnings, one of the valuation measures we use to judge the attractiveness of a potential holding. This is no guarantee of future returns, of course.
We believe the future is bright for this industry. But we cannot know which drugs in the pipeline will ultimately be approved as safe and effective. Therefore we cannot know which company’s stock will do best. This is why it makes sense to have a diversified approach – owning shares in a variety of companies.
Clients, if you would like to talk about this investment theme or anything else, please email us or call.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Stock investing involves risk including loss of principal.
Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.