Top picks 2013: Spectrum Pharmaceuticals

This biotech is moving into the fast-growing market known as biosimilars.

By TheStockAdvisors Jan 2, 2013 10:43AM
Droplet Falling from Pipette into Test Tube Andrew Douglas Radius Images Getty ImagesBy Andy Crowder, Options Advantage

There is no doubt that generic drug makers will thrive in the upcoming cost-driven environment. But there is one area of generics that will thrive more than any other -- biosimilars.

Biosimilars are the generic equivalent of brand-name biologics. And, in fact, this market is expected to grow more than 8,000% by 2020.

Biologics are brand-name products created by biologic processes, rather than being chemically synthesized. They are used to treat various cancers, rheumatoid arthritis and adverse cardiovascular conditions.

According to research group Datamonitor, the global market for biosimilars should explode by more than 1,400% from 2011 to 2015.

And this meteoric rise shouldn't stop there. Sandoz, the current leader in biosimilars, expects the entire biosimilars market could reach $20 billion to $30 billion by 2020.

Spectrum Pharmaceuticals (SPPI) recently jumped into the untapped and growing market of biosimilars. In fact, the stock price tripled since the company announced plans to be among the first biotechs to develop a biosimilar version of Rituxan.

Rituxan is the second-biggest selling product for brand-name pharma manufacturer Roche Holdings AG, with $6 billion in sales.

This could indeed be a huge opportunity for investors over the next few years, and one that I expect will pay off handsomely in 2013.

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