By Hilary Kramer of
Finding Biotech Stocks to Buy -- Look for Takeover TargetsOne of the very best ways to profit from the biotech sector right now is to buy companies that are likely targets for acquisition. Many of the big pharmaceutical companies are in a precarious position right now. They've cut costs as far as they can and many of their blockbuster drugs are going to go off patent in the next three years. The next logical step in big pharma's search for growth is to start going after biotechs with a drug or two in the pipeline.
Biotech Stock #1: ShireThe first stock I want to tell you about is Shire (SHPGY). I think it's almost a foregone conclusion that Shire, even with a $13 billion market cap, will eventually go to the highest bidder. But even if this acquisition doesn't come to fruition soon, Shire has other factors going for it that make it an appealing buy now. Shire is a biopharmaceutical company based in Ireland, but U.S. investors can own shares by buying the American Depositary Receipts (ADRs). The company has two key business segments: best-in-class ADHD medications and "orphan drugs." These are drugs that treat diseases affecting fewer than 200,000 people, and the U.S. Orphan Drug Act of 1983 provides incentives to encourage development of these treatments that might otherwise be skipped over because of the relatively small number of patients who would benefit.
More From InvestorPlace
|6 Sinking Stocks to Abandon Now|
|10 Famous Warren Buffett Quotes for Any Market|
|3 Hidden Takeover Targets to Double Your Money|