The biotechnology sector and exchange traded funds (ETFs) have taken their licks along with the rest of the market, but the sector based on innovation and life-saving technologies has been demonstrating strength in spite of the challenges.

Case in point: In 2008 through Nov. 7, the Nasdaq biotechnology index gained 4.6%, while Standard & Poor’s 500-stock index tumbled 33%, reports Jennifer Schonberger for Kiplinger.

Biotech companies have been seen as a safe haven in tough economic times, with stable earnings that are not dependent upon other economic factors. The companies are proving to be far removed from the broader market and the turmoil on Wall Street.

Long-term prospects for this sector are dependent upon new innovations, as well as the production of replacements for a big number of traditionally produced drugs that are going to lose patent protection over the next few years.

Business activity is ripe in biotech as interest is growing. In October, U.S. drug giant Eli Lilly (ELI) offered $6.5 billion for ImClone (IMCL). Last July, Switzerland’s Roche bid $44 billion for the 44% of Genentech (DNA) that it didn’t already own.

Companies in the sector include Celgene (CELG) up two-hundred fold from its 1998 low; Amgen(AMGN) estimated to exceed $500 million per year; Genzyme (GENZ) sales up 18% annually since 2000.

• SPDR Biotech ETF (XBI): down 8.1% year-to-date, up 6.4% in the last month; CELG is 3.6%; AMGN is 3.6%; IMCL is 4.9%

Tags: Biotechnology, Health Care, Pharmaceuticals, Sector ETFs, Technology, XBI