Trying to understand compounds within drugs to clinical drug trial data/process is complicated and the reason why investors should stay away from drug manufacturers unless they truly understand these unique characteristics of the industry. There are other ways to getting exposure to the health care industry and aging population tailwinds. AmerisourceBergen (ABC) is the perfect example of this because it's basically a logistics company that is underpinned by the pharmaceutical industry. The company operates in an oligopoly environment with only two other competitors that capture 85%-90% of the market share. Returns on capital have been way in excess of its cost of capital showing from an analytical optic the company is capturing economic profit.
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