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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…
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About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.