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The best pharmaceutical stock in 2017 is poised to cash in on a surge of spending on the pharmaceutical industry.
The U.S. Centers for Medicare & Medicaid Services estimate that spending on pharmaceutical drugs could hit $615 billion in 2025. That's an increase of nearly 100% over 2015's pharmaceutical spending, which totaled $310 billion.
That spending increase could help boost pharmaceutical stocks. But investors shouldn't invest in just any drug company. Here's how to find the best pharmaceutical stocks, plus our top pick to buy in 2017…
How to Pick the Right Pharmaceutical Stock
We look for pharmaceutical stocks that meet two criteria: The company has safe and effective drugs and a strong drug pipeline.
When looking for companies with safe and effective treatments, you don't need to wait until the drugs are fully FDA approved. Drugs are considered safe and effective as long as their phase 2 clinical trial data is positive. That doesn't mean they will be approved, but it prevents you from investing too early to know if there is a chance of approval.
A pharmaceutical company should also have a strong pipeline of drugs, which means it is developing several drugs at once instead of relying on just one. With only one in five drugs getting FDA approval, and with established drugs facing competition from generic drugs, a strong pipeline protects the pharmaceutical company from relying on just one drug.
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While those are the best criteria to use when searching for the best pharmaceutical stocks, we've already done the work for you. Our top pharmaceutical stock pick meets both criteria and just had a new drug reach FDA approval. That's why analysts are projecting this pharmaceutical stock could soar by 100% this year…
Tags: pharmaceutical stocks