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Coverage: Overview
Specialty pharmaceuticals encompasses the subset of the bio-pharmaceutical industry with companies whose business models generally have lower risk profiles and superior earnings growth vs. biotech and big pharma. With few exceptions, these companies’ business models are derived from making money from drugs that were invented somewhere else: generic drug companies add value by developing and distributing off-patent drugs thereby lowering the cost of health care for consumers directly. Drug delivery companies apply proprietary formulation technology to improve therapeutic value of existing drugs, often by using a more convenient delivery system or lowering the frequency of medication, thereby improving compliance and lowering the overall health care costs indirectly. Over the past few decades, Specialty Pharmaceuticals have become the fastest growing subsector in health care, with over 100 publicly traded companies. Because the business model incorporates drugs that have already been approved in some form, the risk-profile is lower than for large cap pharma, or biotechnology companies. This often results in faster time to market and rapid growth rates which have attracted significant investor interest over the past decade.
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