CELG Chart

Shares of Celgene (NASDAQ:CELG), a biotech blue-chip stock with a primary focus on oncology, immunology, and inflammation, sank as much as 11% last month before finishing down a little more than 8%, based on data from S&P Capital IQ. Since peaking at more than $140 intraday in late July, Celgene shares finished September officially in bear market territory.

What's the impetus behind Celgene's beatdown? The majority of the blame likely rests with concerns over prescription drug reform. Following a nearly 5,500% price increase to Daraprim, a rare-disease drug purchased by privately owned Turing Pharmaceuticals, presidential hopeful Hillary Clinton seized the opportunity to introduce her call for prescription-drug reform. Her plan entails hitting on a number of key points, but the main gist is that it could reduce the pricing power of drugmakers and limit the out-of-pocket expenses of the American consumer.

To be clear, this isn't a concern just for Celgene -- nearly all biotech stocks could be at risk if some type of prescription drug reform were passed by Congress. However, with Celgene's multiple myeloma blockbuster Revlimid sporting an annual wholesale cost that's in the neighborhood of $100,000, it would more than likely be directly affected by prescription-drug reform.

The other negative catalyst last month was Biogen's announcement that it had licensed an oral S1P modulator from Japan's Mitsubishi Tanabe Pharma. The drug, MT-1303, is being studied as a treatment for multiple sclerosis and other autoimmune diseases, and it works along the same pathway as ozanimod, the drug acquired when Celgene purchased Receptos for a whopping $7.2 billion. Midstage data on MT-1303 is due out this month, and best of all for Biogen, it took only $60 million upfront, with $484 million in possible future milestone payments to make the deal happen. It has some on Wall Street questioning whether Celgene made a good deal when it acquired Receptos.

Now that you have a better idea of why Celgene was sacked in September, let's answer the most important question: Should you now consider it a buy?

As I've said on many prior occasions, despite the competitive landscape of biotech and the always-lingering fear of prescription-drug reform, Celgene could be the best-run biotech company in the sector.

Source: Celgene.

What makes Celgene so unique is that it has so many growth strategies. It primarily grows its business organically by expanding the label indications of its three key drugs: Revlimid, cancer drug Abraxane, and anti-inflammatory Otezla. Organic growth is always preferred among investors to acquisition-based growth or cost-cutting EPS boosts.

However, Celgene also has acquisitions, share buybacks, and collaborations in its back pocket to fuel near- and long-term EPS growth. Purchasing Abraxis Bioscience to get its hands on Abraxane has been a genius move, while Celgene's approximately 30 collaborations set it up to potentially license a handful of first-in-class oncology products.

Celgene's forward P/E of 20 may not look all that appealing, but its sub-1 PEG ratio and huge growth rate tell a far different story. If you're looking for a strong growth stock to add to your investment portfolio, I'd suggest giving serious consideration to Celgene.