Investing In The Pharmaceutical Sector Amid Surging Inflation

Jan. 26, 2023 12:29 PM ET


  • Growth investors often keep a close eye on the pharmaceutical/biotech sector because of the high risk-high reward nature of investing in young companies developing novel drugs.
  • When economic growth stalls and recession fears surface, investors of every discipline turn to the pharmaceutical sector because of the recession-proof nature of this industry.
  • After outperforming the S&P 500 last year, the pharmaceutical sector looks poised to deliver another strong performance in 2023.
  • To achieve investment success in the healthcare sector, an investor needs to have deep knowledge about companies, their products, the pipeline of drugs, technological developments, and the status of regulatory approvals.
  • For the less sophisticated investor, the best bet is to gain exposure to this sector through collective investment schemes such as mutual funds and exchange-traded funds.
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The pharmaceutical/biotech sector has always been a favorite among growth investors because of the high-risk/high-reward nature associated with small-cap biotech companies developing novel drugs to fight diseases once thought to be incurable. Investing in the healthcare sector, however, is not just for

Data by YCharts

Market-implied odds of a recession


Fund performance as of December 31, 2022


Performance metrics as of December 31, 2022


Performance metrics as of December 30, 2022

First Trust

Fund results


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This article was written by

Dilantha De Silva profile picture
Investing made easy with guru-inspired insights
Hello, my name is Dilantha De Silva, and I am an investment analyst with 8 years of experience in financial markets. I specialize in U.S. equities and incorporate a top-down approach to identify developing macro-level trends and the companies that would benefit from such trends. As the founder of Leads From Gurus, a Marketplace service on Seeking Alpha, I aim to uncover alpha-generating opportunities and provide timely updates on new articles. I also work with leading financial publications including Refinitiv, ValueWalk, and GuruFocus. My portfolio is designed to benefit disproportionately from the rise of under-covered small-cap stocks, which I identify through a rigorous due diligence and research process. I believe that the best investment opportunities can often be found in hidden gems that are overlooked by many investors and analysts. My investment approach is focused on long-term macro trends and themes, and I use my top-down analysis to identify individual opportunities within these themes. I take a disciplined and consistent approach to investing, and I am a strong believer that patience and conviction are key to long-term success in the stock market. I build and maintain valuation models for all stocks in my portfolios to estimate the intrinsic value of these companies in a fair, conservative way to avoid value traps in this volatile market. I am a CFA level 3 candidate and an Associate Member of the Chartered Institute for Securities and Investment (CISI, UK). During my free time, I enjoy reading and staying up-to-date with the latest financial news and trends. Please click the "Follow" button to stay updated on my latest articles and insights.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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