You know how we watch in movies where some pharmaceutical companies manufacture drugs and it causes a breakout or an epidemic of some sort? Well nine out of ten times in real life, those drugs they manufacture turn out to be life-saving and end up treating human ailments thoroughly. Well, it does depend on the person because we’re all biologically wired differently but if you were to take a survey, the greater number of people always experience relief. Wouldn’t you say it is a home run and jump head first into it? Naturally, anyone would want to invest right away but you would need to consider the fact that they all have their equal share of risks. That being said, would you think these subsets of pharmaceutical companies are good investments considering the levels of risk involved vis a vis the potential to make it big? Let’s look at that.
When looking to invest in these companies, a salient question to ask is “does the drug work”? This is a very important question that most people fail to consider. It is easy to deal with the business angle and to worry about figures and the percentage you’d make when the product hits the market but you should also consider that there are human beings at the end of the chain who are banking on the fact that the drug will work and help cure whatever ailment they have. While there are organizations like the FDA to verify and scrutinize the drugs and approve them thereafter, asking the question just means you are intent on securing your investment. A lot of times the assurance that the drug works is why you should invest. Pharmaceutical companies experience a lot when in the middle of making a product, the clinical trials the drug undergoes and when the endpoint is met, the challenges with marketing the product. Bio Pharma medicines aren’t like conventional ones. The fact these drugs are manufactured in organisms like bacteria and yeast makes the process easily replicable and not such a great risk. When they are approved and circulated, there is the possibility of major sales and of course returns on your investment simply because they are freshly manufactured and not just old drugs with new names.
Bio Pharma stocks are also more stable than conventional ones because there are some levels of predictability. It is also suitable for new investors who are not exactly experienced with risks and cannot wait for the development of a drug long term. Other conventional products tend to trade on factors like clinical trial failures, competition from other companies and of course the hassles from regulatory bodies. This is unlike the pharmaceutical companies which trade on profits.
One thing with these companies, however, is the level of investment they have, companies with bigger investors tend to survive any setback they encounter but you cannot say the same for those with smaller investments. Ultimately, Bio Pharma can either make it big with their products or not make it at all. This is the level of uncertainty with these products but you could say that risk-taking is what fuels investments.