10 Drug Stocks with Healthy Prospects


Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

Pharmaceuticals have gotten interesting again as battles shape up for the latest drugs to treat diabetes, hepatitis, and obesity. But which ones are the best bets? MoneyShow’s Jim Jubak, also of Jubak’s Picks, explores the current state of the industry.

It’s been a long time coming, that’s for sure. For what seems like a geologic epoch, investing in drug stocks has been about finding an attractive dividend and avoiding getting killed when the patent on a best-selling drug expires.

Growth? Forget about it.

But that looks like it’s changing—for some parts of the sector, anyway. For some drug companies, these are actually exciting times.

And given that some of the sectors that led the market upward in the first quarter look they might have problems in the second quarter, the excitement couldn’t come at a more welcome time for investors.

Exciting? Drug stocks? Absolutely.

3 Battles A-Brewing
Big dog Novo Nordisk (NVO), traded as NOVOB.DC in Copenhagen, and upstart Amylin Pharmaceuticals (AMLN) are in a pitched battle to see who will take the biggest share of growth in the market for diabetes drugs.

At the end of February, a panel of advisors at the US Food and Drug Administration voted 20 to 2 that the benefits of Qnexa, a weight-loss drug from Vivus (VVUS), outweigh the risks. An approval of Qnexa or competing drugs from Orexigen Therapeutics (OREX) and Arena Pharmaceuticals (ARNA) could put the first new weight-loss drug on the market in 13 years.

A new class of hepatitis-fighting drugs introduced by Merck (MRK) and Vertex Pharmaceuticals (VRTX) only last year is already looking at a challenge from a new group of therapies from Bristol-Myers Squibb (BMY), Gilead Sciences (GILD), and Johnson & Johnson (JNJ).

You might notice that the three potential drug opportunities that I’ve just mentioned have three things in common:

  • First, they target chronic (rather than acute) conditions.