Top Picks 2016: Cambrex Corp.

01/11/2016 7:00 am EST


Gregg Early

Managing Director, Fresh Eyes Media

My Top Pick for aggressive investors in 2016 is the leader in a market known as Contract Manufacturing Organizations (CMO) and it's becoming very big business, suggests Gregg Early, executive editor of The Whaley Report.

Basically, a drug company designs a drug and Cambrex Corp. (CBM) would then manufacture it in quantity for testing and trials.

Market research firm Visiongain forecasts that the worldwide pharmaceutical contract manufacturing market will grow to $71 billion in 2018. And Cambrex is the top CMO in the game.

It now costs about $3 billion to get a drug through drug trials. That means most drug companies want to make their new products get the best shot possible of passing the first time out.

There are analysts that project that, today, about 40% of the drug development business is outsourced and that number will likely increase to 80% over the next several years.

What's more, Cambrex usually gets paid a fee for its services, plus a royalty off the drug they deliver.

Getting a cut of today's major blockbuster drugs without assuming much of the risk is quite a niche. It's off from its highs so now is a good time to buy.

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