Inside Investing | Apr 15, 2019 16:40
“Cancer” is one of the scariest words in the English language. It’s the last thing you want to hear from your doctor, a family member, or a friend. In the United States alone, over 500,000 people die from cancer-related complications annually. The search for a cure is not an easy one, as there are various types of cancer, which behave differently from one another. At the same time, it’s also an investment opportunity, and potentially a very lucrative one at that.
The global cancer therapeutics market is huge and still rapidly growing. In 2017 it was worth $121 billion and is expected to rise to $172.6 billion by 2022. Some of the main reasons are that the current treatments involve chemotherapy or surgical intervention - both are traumatic to the body to some degree, and the goal is to minimize (or even eliminate) the trauma. The companies we discuss below are looking for other solutions; biotherapy, blockbuster drugs, gene therapy, and technology-based diagnostics and solutions. When it comes to R&D, large pharmaceutical corporations prefer to buy new medication or technologies instead of invest in the research and development themselves, which can translate to big bucks for wise investors.
These companies have been around for a while, and are financially stable, holding patented medications they’ve developed or purchased. These stocks are considered to be a good defensive strategy; a great example would be S&P 500 Health Care - in the last year, it has outperformed the S&P 500, going up more than 9% versus -0.5% respectively.
The biotechnology companies develop treatments and cures for various diseases and syndromes. It’s not uncommon for these company to be bought by, and integrated into larger pharmaceutical organizations. Their stocks are more volatile, and can dramatically change with each success and failure of clinical trials and news of impending takeovers.
The search for pharmaceutical solutions for cancer is as old as the diagnosis of cancer itself. Companies in the field conduct research into the effects of various chemical combinations on cancer-damaged DNA, as well as ways to activate DNA repair mechanism within the body. Other pharmaceuticals are used to alleviate cancer symptoms and chemotherapy side-effects.
Genetics & Testing
It’s not all about the cures, though. There are more than a few companies who work on finding new and more effective ways to test for and diagnose cancer earlier. Other companies research the human genome to locate both genes that may lead to cancer, as well as ones that can prevent it or repair cellular damage caused by it. Others focus on developing genetic therapies to help prevent cancer altogether.
The avenue of cancer-treatment is varied and encompasses everything from big pharma to small tech startups. Investors can use big pharma stocks defensively, as well as invest in somewhat more volatile-yet-potentially-rewarding startups. It doesn’t matter if you invest because you’re feeling altruistic, or you recognise the market potential - investing in cancer cures can end up benefiting all of humanity, as well as your portfolio…
Got thoughts on the cancer industry? Share them in the comments below.
Disclaimer: This post should not be considered an endorsement, nor investment advice. Do your due diligence before investing in any particular asset or asset class.
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