Rough Waters Ahead for Pharmacy Benefit Management Companies?

In the following video segment, Motley Fool health-care bureau chief Brenton Flynn continues his discussion of the smaller Catamaran (NASDAQ: CTRX  ) compared with its much larger peers in the pharmacy benefits management space, and notes that scale is one place where the company simply can't compete. But, on a broader note, he talks about a headwind potentially facing the entire industry, one that was initially a bullish point for PBMs -- the growing utilization rate of generics. He points out that eventually, that's going to hit a ceiling, and at that point, the players in this industry are going to have to shift to services to continue creating value.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. Make sure you start 2013 with a bang and get the inside scoop on what Motley Fool superinvestor David Gardner will be buying this year. He's crushed the market in his Stock Advisor and Rule Breakers portfolios for years, and now you can take a personal tour of his flagship stock-picking service: Supernova. Just click here now for instant access.

The relevant video segment can be found between 9:31 and 11:10.