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What has been the fastest-growing major sector of the economy?

Health care, easily: Health care expenditures have been rising relentlessly for more than a generation, and demand for health care will continue to accelerate for at least two generations longer. A big underlying cause for the health care boom has been the aging of the U.S. along with other developed countries and China. Demographics is among the most immutable of trends, and it tells us that the elderly, who account for a disproportionate part of spending on health care, will be making up a growing part of our population. So should health care stocks be a major investment theme, on a par with energy, Chindia and inflation? Yes and no

While health care providers are being propelled forward by powerful demographic tailwinds, they�re also running into some equally strong headwinds, namely eventual limits to our ability to keep spending more. Health care spending already accounts for more than 15% of gross domestic product, up from 10% in 1985 and 13% in 2000. The U.S. is rapidly approaching the point where growth in health care spending will wreak fiscal havoc. Thus, while demand will be rising, the growth in spending will inevitably start to slow. For investors, a key conclusion is that the health care sector will be rife both with big winners and big disappointments.

Potential winners fall into two groups. First are companies that can develop true blockbuster medications, unique drugs with a demonstrable effect in curing disease or improving health. Second are products and services designed to cut health care costs.

Biologics such as the above are much more difficult to copy than are chemically engineered drugs. That�s because they require highly precise conditions in order to grow. The upshot: They are far less likely to face competition from generic versions.

Major pharmaceutical companies haven't been willing to invest that kind of time and money. Sometimes they settle for investing in the smaller companies that do make such a commitment. Eli Lilly has a 50% stake in Byetta and will profit if the drug lives up to its potential, but Amylin will profit far more. Amylin, while risky, remains a favorite long-term speculation.

The biotechnology sector is an innovative and growing industry. Back in 1982 the sector had virtually no products, now biotech firms have successfully commercialized over 30 products, with nearly 10 times that number still in clinical trials. Biotech companies have introduced many new drugs products, but many biotech firms are still in the developmental stage, with their fortunes largely determined by investor perceptions of the relative merits of their research and development pipelines. In addition, the endeavors of biotech research have extended beyond the field of medicine to other fields, such as agriculture, energy, and environmental protection.

One of the most striking aspects of the biotech industry is its scarcity of earnings. Most biotech companies carry losses for years, even after they have launched a new product. As a result, valuing biotech's is a precarious undertaking at its best. The details of a biotech firm�s business, its research methods, its test results, even the products themselves, can be highly complex. The success or failure of a drug during clinical trials are difficult and often impossible to predict.

Investing in biotechnology stocks are somewhat unlike other investing stocks because in valuing biotechnology stocks, it has always been difficult to use traditional net present value and discounted cash flow approaches, particularly for the clinical and pre-clinical stage companies. Predicting the probability of a single product's success in the clinic depends on many variables such as clinical trial design, difficulty of indication, and quality of Phase II data. In addition, the company's financial well-being and corporate partnerships may further complicate the valuation analysis. The large cap and profitable biotechnology companies have had the broadest appeal to investors, but that is only a handful of companies. Investors in biotech stocks take a long term approach to investing. There are stocks that can significantly appreciate in value overnight if a trial is successful. Conversely, they can also drop by 30% to 70% in value with disappointing results. Biotech companies� stocks tend to be heavily influenced by favorable or unfavorable news regarding the development or testing of a product.

RHINO BIOTECH is an investment publication that has a primary focus both on short and long term in companies worldwide.

RHINO BIOTECH investment publication provides the investor with information on the buying and selling along with the information on the company and its business.

RHINO BIOTECH has an annual subscription fee of $250.00. Or a 2 year subscription at $400.00 This includes a weekly e-letter which details the BUY and SELL recommendations. The portfolio usually consists of 10-15 stocks, both in short and long term holdings

Investing in biotechnology stocks is not for everyone and is best suited for risk-tolerant investors seeking above-average capital gains for long term investing. The biggest returns and risks come from getting into companies in pre clinical trials, while the most secure investments are in companies that are well into clinical trials with strong marketing alliances, but the upside, however, may be limited.

Disclaimer:

World Wide Rhino LLC does not act as an investment advisor or advocate the purchase or sale of any security or investment. You may not forward, reprint or post any of the material read here, as it contains information exclusively provide for the benefit of subscribers to World Wide Rhino LLC. The organizations, their officers, directors, employees and associated individuals may own or have positions in recommended securities discussed in the publications and may add to or dispose of the same investments recommended in this publication. Investments should be made only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company. All World Wide Rhino LLC employees and agents must wait twenty-four hours after an internet publication to follow any recommendation. Past performance does not indicate future returns. Do not invest with monies that you can not afford to lose. By logging onto these newsletters, you are agreeing to these terms.