Pick-and-shovel plays can be some of the best investments around. Forget trying to find gold yourself: Sell the equipment to everybody who wants to look, and you can make yourself a tidy profit. So too in the pharmaceutical and biotechnology spaces -- investors who are worried about the risks of specific pipelines and drug candidates can instead look to the industries that service these companies.
While you could argue that clinical research organization specialist ICON
This Ireland-based company reported second-quarter results Tuesday morning, with revenue climbing 11% and reported earnings per share climbing 20%. With tight control of selling, general, and administrative expenses, the company was able to boost its operating margin by more than a full percentage point -- a significant factor in the earnings growth this period.
Booking trends were also strong, as ICON reported $140 million in net new business during the quarter -- roughly 1.6 times reported sales for the period. What's more, the backlog is now up to a solid-looking $633 million.
The biggest downside to this story would seem to be that the sector has already had a pretty good run. ICON is up more than 22% in the last year, while industry big boys Pharmaceutical Product Development
There's certainly money to be made in this space -- witness eResearchTechnology's
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).