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Thank you, Monty Python, for the title – one that is sorely needed at the moment. People need to think about something other than the market correction set off by concerns out of and about China. We can’t afford to all be in a dither. It has been exciting for the global economy to seem to want to improve and for investors to make a pile of money in the stock market.
For the past several days, however, people have simply gotten out of control. That’s right, I said “people,” not “things.” Things are doing what we should expect them to do, given the circumstances. Things don’t panic. People panic. Indices going up are a Petri dish for euphoria. Indices in decline are a breeding ground for fear. And, in case you haven’t noticed, it’s the people with the money that are panicking, not the average bloke. There are different motives and emotions at play, but, lest we forget, when the undertaker comes, we go on and our money goes to someone else. So I feel the need to discuss something other than China, mining, oil prices, and especially Barack Obama.
I spent some time checking pharmaceuticals today after noticing that SkyePharma PLC (LSE:SKP) share price had closed up 9.07% and 24.25 points to 291.50, following issuance of it 2015 Interim Results. I immediately got to thinking that I had hardly heard mention of pharmaceutical stocks for the last week. I thought that rather odd. I discovered several interesting items worthy of note:
- The aforementioned gain in SKP shares, especially when finnCap gave SKP a “BUY” rating.
- Reports that AstraZeneca’s (LSE:AZN) acquisition, streamlining. and pipeline strategies are beginning to improve the outlook for the buy-and-hold investment strategy that we highly favor.
- Yet other analysts are saying things like “pharmaceutical (in general) remains a “BUY” opportunity.
Time to Buy a Pharm?
Pharmaceutical is a sector that is not quite as sexy as oil or as glamorous as technology, but it tends to stay healthier than other sectors, especially over long periods of time. The sector should continue to see mergers and acquisitions as new drugs are developed by research companies and universities. Though the smaller firms can often focus on finding the treatment for a singular need, they lack the ability to transform their research success into commercial success because they don’t have the well-developed, global distribution systems and influence that their suitors have.
The demand for innovative and efficacious treatments continues to increase in what has become a highly competitive environment where major companies need to keep their development pipelines full so that, on the healthcare side, new remedies keep becoming available and, on the business side, revenues are strengthened by patented medications that generate the greatest profit margins.
Even in the face of the volatile market situation, some stocks have been relatively unaffected by the storm. Pharmaceuticals make up a fair share of those. You don’t have to take big risks to make money in the stock market. You just have to make wise choices. From where I sit, pharmaceuticals continue to look like wise choices.
