FDA's Safety Push Raises Drug Stocks' Risk Profile

Drug safety is making drug stocks riskier.

When it comes to treating nonterminal illnesses, the Food and Drug Administration drug-approval process is increasingly focusing on safety, observers say. In practice, that means that treatments for nonfatal diseases are more likely to be rejected than, say, cancer drugs. While that makes sense from a medical perspective, the agency's agenda only adds to the risk for investors betting on companies entering the approval process.

Now, with the FDA preparing to judge scores of new treatments in 2002 for ailments ranging from psoriasis and diabetes to impotence and the flu, investors must consider which new drug candidates face the steepest course for approval, and hedge their bets accordingly. ...