UK stock investing can be a challenging pastime, especially when it comes to finding growth shares. Indeed, investing in growth stocks can be incredibly risky because trying to forecast how a company will perform in the next few years is virtually impossible. That’s not just limited to growth shares. It’s the same with all investments. However, by focusing on blue-chip FTSE 100 stocks, I believe it’s possible to reduce the risk of investing in growth shares.
These large multi-billion-pound companies tend to have more checks and balances in place than smaller firms, which means the risk of something going wrong is significantly reduced. However, it’s always going to be impossible to eliminate the threat.
With that in mind, here’s one FTSE 100 growth share I’m considering adding to my portfolio today.
UK stock investing opportunity
Hikma Pharmaceuticals (LSE: HIK) is, in my opinion, one of London’s hidden growth stars. The FTSE 100 company is one of the largest producers of generic medicines around the world.
These products are vital for healthcare systems worldwide as, without them, treating patients would cost significantly more. When a drug is first launched, it’s protected by a patent for several years. This allows its producer to recoup the development costs and earn a profit.
However, other producers, like Hikma, can jump into the market when the drug comes off-patent. It can manufacture and sell treatments for much less than the branded version. In some cases, the discount is 70% or more. This is a huge business, and it’s only likely to grow.
But Hikma is always developing new products. It also produced some of the essential drugs used to treat coronavirus patients. Hikma is one of the primary producers of dexamethasone used to treat patients hospitalised with Covid-19. This helped the company to a 6% increase in revenues for 2020. Operating profit jumped 17% to $566m.
FTSE 100 growth
Of course, operating a business that’s based around the idea of generic versions of others’ products has significant risks. The company is always fighting legal battles, and this is just an extra cost of doing business.
It’s also suffered several setbacks whereby regulators have prevented its generic version of a branded product from coming to market. Significant legal battles and substantial product setbacks have impacted the company’s stock price in the past. As long as the corporation is in the business of generic pharmaceuticals, this will continue.
Despite these risks, I’d buy the FTSE 100 growth stock for my portfolio today. Healthcare is a growing market. I don’t think that’s going to change.
What’s more, affordable healthcare is an increasing issue worldwide, and Hikma is one company policymakers can rely on to produce treatments at affordable prices. However, this could become a risk if those policymakers move in another direction.
