Although there's no comparison to 2008-2009, this has turned into one of the more volatile years in recent history for the stock market.

Last year, the stock market went without so much as a 4% decline from its highs. In fact, between August and the end of 2017, the market didn't register more than a 1% drop. However, this year we've registered two official corrections -- i.e., a decline of at least 10% from a recent high. Although these corrections might take investors by surprise, especially given the swiftness of the downside moves, they're actually quite common. Since 1950, the S&P 500 has undergone 37 corrections, or one every 1.8 years.

As you might imagine, stock market corrections tend to be agnostic. In other words, they indiscriminately bring down valuations in nearly every industry and sector, mostly on account of fear from short-term traders driving markets lower. But in some instances, this fear is unwarranted.

A handful of prescription drug capsules lying atop a messy pile of hundred dollar bills.

Image source: Getty Images.

This high-growth industry is steady as a rock during recessions and corrections

When the stock market begins to sink, investors often turn to defensive plays, such as precious metals and defensive stocks (e.g., utilities). But there's another industry that should be included on this list but rarely ever gets the proper attention: pharmaceuticals.

Now, I know what you're probably thinking: "Aren't high-growth stocks the first to be walloped when stock market corrections occur, or when the U.S. economy enters a recession?" And the answer is, usually, "Yes."

But the pharmaceutical industry is a different beast altogether. It doesn't play by the same rules as traditional industries, which makes it particularly appealing if it faces extended downside during a stock market correction or recession.

The important thing to remember about drug stocks is this: We don't get to choose when we get sick, or what ailment we contract. Though a small fraction of the population might choose to hold off elective procedures and preventive care as the result of a weaker economy or perhaps a tumbling stock market, the vast majority of the population is going to go to the doctor or hospital and receive medical care and prescription medicines to improve or maintain their health. This creates a steady and predictable stream of demand for drugmakers. Even more so, it gives them incredible pricing power, which they've been able to pass along as higher list prices to consumers, and loftier wholesale prices to insurers.

A prescription drug tablet with a dollar sign stamped onto it.

Image source: Getty Images.

According to data provided by the Bureau of Labor Statistics, price inflation for prescription drugs has only been negative two times over the last 50 years, and those came all the way back in 1972 and 1973. Between 2000 and 2018, prescription drug inflation has averaged approximately 3.5% per year, with particularly strong inflation registered during periods of recession. The dot-com bubble bursting saw prescription drug inflation top 5%, with the drug-price inflation hitting 3.4% in 2009, and topping 4% in the years immediately following the Great Recession. This pricing power, along with the guaranteed need for prescription drugs, ensures that pharmaceutical stocks generate predictable cash flow and healthy top-line growth. 

Pharmaceuticals can be a cure for investors' ills during a recession

We can also look at the top-line performance of pharmaceuticals during the Great Recession -- the worst downturn in the U.S. economy in 70 years -- for further evidence that this is an industry you can count on when volatility and fear pick up.

For example, pharmaceutical kingpin Pfizer (NYSE:PFE) wound up logging $50 billion in sales in 2009, which represented sales growth of 4% from the previous year. Focusing just on the U.S. market, Pfizer recorded 7% full-year sales growth.

The story was similar with Bristol-Myers Squibb (NYSE:BMY), which reported $18.8 billion in full-year sales in 2009, representing a 6% improvement from 2008.

A magnifying glass being held over a publicly traded company's balance sheet.

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Because big pharma sells high-margin, exclusive medicines that are protected by patents for a defined period of time, these drugmaking giants are usually able to post healthy profits during stock market corrections and recessions. Pfizer wound up raking in $8.6 billion in net income in 2009, with Bristol-Myers one-upping the pharma kingpin with $10.6 billion in net income. Not to mention, big pharma dividends almost always outpace the average yield of S&P 500 stocks.

Now, to be clear, pharmaceutical stocks aren't without risks. Just a few years following the Great Recession, companies like Pfizer and Bristol-Myers contended with their first major patent cliff -- i.e., the loss of patent exclusivity on one or more blockbuster branded drugs. Losing exclusivity on cholesterol-lowering drug Lipitor and erectile-dysfunction drug Viagra for Pfizer and blood thinner Plavix for Bristol-Myers wound up shrinking top-line results for both companies. But, to clarify, the struggles these companies contended with had nothing to do with the performance of the stock market, or the state of the U.S. economy.

Though there is no such thing as a surefire investment in the stock market, you could certainly do a lot worse than the pharmaceuticals industry when stock market volatility picks up or a recession rears its head.