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Forget Bitcoin! I think buying these 2 pharma stocks could be a better way to get rich

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Investing in new ideas and new technology is often an exciting prospect. They have the potential to generate high growth and strong returns for investors, which may be partly why Bitcoin has been such a popular place to invest in the last few years.

However, growth may also be recorded in more obvious places. A growing and ageing world population may mean that the healthcare industry offers significant investment opportunities. And with many of its incumbents offering sound fundamentals, it could have a more favourable risk/reward opportunity than Bitcoin.

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With that in mind, here are two pharma stocks which could be worth a closer look at the present time.

Improving prospects

Reporting on Wednesday was global pharmaceuticals and services company Clinigen (LSE: CLIN). The first half of its financial year has been relatively positive, with revenue rising by 25% at constant currency. Gross profit has increased by 25% on an adjusted basis, while adjusted earnings per share have moved 9% higher to 23p.

Acquisitions have been largely responsible for the company’s improved performance. M&A activity has helped to deliver an improved balance across its complementary businesses. The company has also recorded strong growth in Africa and Asia Pacific, while its Unlicensed Medicines division has been delivering improving levels of sales.

Looking ahead, Clinigen is forecast to post a rise in earnings of 20% in the current year. It trades on a price-to-earnings growth (PEG) ratio of around 0.9, which suggests that it may offer a margin of safety at the present time. Therefore, while arguably less exciting than owning a virtual currency, it may be a better risk/reward proposition for the long term.

Rising valuation

Also offering long-term growth potential within the healthcare industry is Hikma Pharmaceuticals (LSE: HIK). It is focused on generic products which could benefit from rising demand around the world over the long run.

The company has endured a mixed few years. A number of profit warnings caused investor sentiment to come under pressure between 2016 and 2018, but since then it has been able to generate a significant improvement in its share price performance. In fact, its market valuation has doubled in the last year, and further growth could be ahead.

While Hikma may not be the fastest-growing pharma stock in the FTSE 350, its business model and strategy seem to be improving. Its recent update showed that it is making progress in reducing costs in its generics division, while its injectables segment is showing resilience. It is also focusing greater resources on its product pipeline, with it seeking to boost its R&D function and accelerate a number of projects.

With the stock having a wide geographic spread and what appear to be sound fundamentals, it could generate impressive share price growth. While potentially not as exciting as new technology, it may nevertheless prove to be a worthwhile investment opportunity in the long run.

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Peter Stephens owns shares of Hikma Pharmaceuticals. The Motley Fool UK has recommended Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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