The Next Mega-Boom In China
China has developed quite a reputation for setting off investment booms. They’ve done it time and time again in a wide variety of asset classes.
Who can forget the boom in commodities from 2002 through mid-2008? China’s insatiable demand for nearly every kind of commodity drove one of the biggest boom cycles in history.
And, what about the massive explosion in Chinese stocks from mid-2005 through October 2007. In just two years time, the Shanghai Stock Exchange Composite Index soared more than six-fold in value.
The list goes on and on…
Savvy investors made fortunes from these boom (and bust) cycles.
Now, another mega-boom is setting up in China.
This time around, China’s pharmaceutical industry is entering a multi-year boom phase. According to research firm IMS Health, China is expected to become the world’s third largest prescription drug market in 2011. And, this market is expected to double by 2013.
Three important trends are converging to drive rapid growth.
Trend 1: Population
The first trend is aging of the Chinese population. Over 160 million Chinese are 60 or older. And, this segment is expected to increase to 300 million by 2020. Simply put, older people spend more money on medications than younger people.
Trend 2: Income
Another big trend is rising incomes. China’s rapid economic growth is boosting incomes across all social classes. As the standard of living improves, the Chinese are spending more on health care and medicines.
Trend 3: Universal Health Care
The third trend could literally open the spending floodgates on pharmaceuticals. I’m talking about China’s plan to provide health insurance to all 1.3 billion Chinese by 2011. You can see how this trend is going to drive demand for medications into the stratosphere.
So, how do you make money from this amazing opportunity?
It just so happens there are a number of small-cap and penny-sized Chinese drug stocks trading on U.S. exchanges… and a number trading on other exchanges as well.
The best ones have certain characteristics in common.
Look for companies with large product portfolios, robust pipelines of drugs in development, and nationwide distribution networks. Also, make sure they have strong research and development programs and access to capital.
These stocks will have you smiling all the way to the bank!
I’ve recently recommended a new hot stock to subscribers of my Penny Speculator (TPS) advisory service. It’s perfectly positioned to cash in on the trends I described above.
Category: Penny Stocks
