The pharmaceutical industry has been a source of extraordinary returns for investors who have picked the right stocks. Since the end of World War II, five of the top 30 performers in the U.S. stock market have been drugmakers, and some of them have achieved this feat in a relatively short time span.

For example, (NYSE: PFE) stock would have turned an initial investment of $10,000 into more than $1 million if you had bought it in 1981. By comparison, the same amount invested in some of the best-performing mutual funds over this period would have failed to eclipse the $900,000 mark.

What makes pharma stocks so lucrative? Many factors contribute to their unusual growth, such as the increasing demand for healthcare from an aging global population and the worldwide expansion of access to medical services. But the most important factor is innovation.

Continue reading

Source Fool.com