Forbes

HOW TO PLAY IT

- by William Baldwin

Drug de­vel­op­ment is haz­ardous, be­cause most novel ther­a­pies flop and politi­cians are aching to crack down on the crazy pric­ing of the few that suc­ceed. A more se­date way to make money: Run clin­i­cal tri­als and do other con­tract work for phar­ma­ceu­ti­cal com­pa­nies. Sy­neos Health gets $4.5 bil­lion of an­nual rev­enue that way. Two neg­a­tives are an im­pair­ment of op­er­a­tions dur­ing the pan­demic and the re­cent de­ci­sion by two pri­vate eq­uity back­ers to un­load shares. The pos­i­tives in­clude a grow­ing or­der back­log and a rea­son­able price: The en­ter­prise value is 10 times likely 2021 earn­ings be­fore in­ter­est, taxes and amor­ti­za­tion.

William Baldwin is Forbes’ In­vest­ment Strate­gies colum­nist.

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