Follow Biotech & Pharma Alerts Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
Even if your name is Bill Gates or Warren Buffett, $3 billion is a lot of money.
And even if you're finding that the years fly by as you get older, 12 years is a long time.
Yet, on average, that's what it takes for a biopharmaceutical company to develop a new drug from discovery stage to pharmacy shelves.
Moreover, the ratio of researched treatments to eventually approved therapies – at somewhere between 5,000-to-1 and 10,000-to-1 – may be even more depressing for drug developers.
However, if all goes as planned – if a drug makes it into your medicine cabinet – then they'll make that money back… and more. Particularly if they come up with a real blockbuster.
But still, so much vital R&D money goes down the drain.
Little wonder then that a major drug player might want to realign its operations to be less focused on the boom-and-bust cycle of drug research.
Today, we'll explore a Big Pharma leader that's doing just that.
It got started on this move three years ago.
It just made a big promotion that will serve as a further catalyst in this same direction.
And its stock could make you 20% a year – or more – for a long time to come.
When Politics Gets Involved
Biotech research used to be mostly focused on finding new treatments for all manner of diseases, from cancer and epilepsy to diabetes and respiratory infections.
Now there's another factor that life-sciences firms simply can't escape – politics.
For one thing, the Trump administration has made it clear it wants to combat the rising price of prescription drugs. In fact, this was one of the few issues Donald Trump and Hillary Clinton agreed on during the 2016 campaign.
It also explains why the bellwether iShares Nasdaq Biotechnology Index (Nasdaq: IBB) is up only 1% over the past six months, a period during which the S&P 500 gained nearly 10%. Wall Street is worried about the impact all of this will have on profit margins.
Caught between the high cost of bringing new drugs to market and political pressure, you understand why some biopharmaceutical firms are focusing on other things – like cosmetics or drugs sold over the counter.
A firm we have talked about a few times in the past made that very move nearly three years ago. In light of recent events, our focus on that company and its corporate moves seems rather prescient.
GlaxoSmithKline Plc. (NYSE ADR: GSK) decided back in 2014 to smooth out its cash flow and R&D spending by moving into consumer healthcare. It did so by paying $20 billion for a big chunk of the consumer healthcare and vaccines units from Novartis AG (NYSE ADR: NVS).
And just last week, GSK handed investors what promises to be a strong catalyst for the stock – a new CEO.
A Powerful Pedigree
Emma Walmsley, the firm's new chief executive officer, knows how to target glo…
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.