2 Ways to Play a Pharmaceutical Breakthrough

A peak at recent news headlines is enough to put anyone in a funk. But clinical depression is much more serious than that. 

The symptoms can have a serious impact on someone's quality of life, even incapacitating them and spurring suicidal tendencies. As many as 15% of men and 25% of women are expected to be diagnosed with some form of clinical depression in their lifetime, and the numbers are rising both in the U.S. and elsewhere.

A byproduct of the trend: Depression treatments are providing a huge source of revenue for many pharmaceutical and biotech firms. Investors would be wise to see which therapies are on the rise and which companies are at the forefront of this field, including Big Pharma organizations. 

According to a study by Zion Research, from its value of $14.51 billion in 2014, the market for depression-battling drugs is expected to generate revenue of as much as $16.8 billion by the end of 2020. That represents a compound annual growth rate (CAGR) of 2.5% between 2015 and 2020.

One of the most promising treatments for depression is with ketamine. Although the drug has traditionally been intended as a veterinary anesthetic and analgesic (and has found notoriety as a party drug), researchers recently tracked down the brain circuitry that they believe activates the anti-depressant power of the drug in humans. By developing drugs that target this part of the brain, the benefits of ketamine can kick in, without the addictive, hallucinogenic side effects.

Ketamine has another advantage over traditional anti-depressant drugs: It takes only a couple of hours for the effects to set in, rather than weeks. That can mean the difference between life and death for some people with severe depression. And it also means there are big opportunities to profit.

Personal product and pharmaceutical giant Johnson and Johnson is one of the leaders in developing new ketamine therapies for depression. It's working on a nasal spray of esketamine, which provides fast-acting relief for treatment-resistant depression, as well as for major depressive disorder with imminent risk for suicide. This drug is currently in FDA trials.

Another Big Pharma play on ketamine is Allergan, which has two therapies undergoing FDA trials, including the intravenous drug rapastinel, which it acquired through the purchase of Naurex last year.

These two companies offer intriguing, potentially quick profits because of their ketamine products. 

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.

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