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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…
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.
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…
The Best Pharmaceutical Stock in 2017 Could Bring You 100% Profits
Insys Therapeutics Inc. (Nasdaq: INSY) just received FDA approval for its new drug, Syndros, and expects to bring it to market in August. Syndros is a cannabis-based medication developed to combat nausea in patients who receive chemotherapy.
The market for Syndros is potentially huge. The National Cancer Institute indicates that nearly 15 million people have cancer as of 2014. And of those patients, 80% experience nausea and vomiting related to their chemotherapy treatments.
Syndros could also have an “off-label” use. Off-label means use of medication for purposes that the FDA hasn’t approved but that have been shown to be effective. Syndros’ active ingredient, dronabinol, has been shown effective in the treatment of pain.
And the pain treatment market is even larger than its FDA-approved market. Transparency Market Research reports that worldwide sales of pain medications are expected to rise from just over $60 billion in 2015 to $83 billion in 2024.
INSY also has a strong pipeline of safe and effective drugs, with six additional treatments in development. Four are currently in phase 2 trials, and two are in phase 3 clinical trials.
Between the drugs on the market and the pipeline prospects, we think Insys is the best pharmaceutical stock to buy this year.
And analysts are bullish on the stock too. The consensus one-year target price for Insys is $16.40. That’s a gain of 26% over its current trading price of $13.00 per share. But some analysts have INSY going as high as $26.00 per share in the next 12 months. That would be a gain of 100%.
The Bottom Line: Spending will nearly double in the pharmaceutical industry by 2025. Insys is set to cash in big on this industry growth with its latest cancer drug, which may also prove to be an effective non-opioid pain treatment.