Biotech ETFs: Where the Future Lies

February 5th at 2:00pm by Tom Lydon

ETF biotechBiotechnology is continuously advancing and the future may lie in personalized medicine. The biotech sector, along with related exchange traded funds (ETFs), may see billions in revenue as this market grows in the coming years.

Biotech companies, investors, providers and big pharmaceutical giants are bullish on personalized medicine and have readily entered the field, writes Rebecca Vesely for Modern Healthcare. “Personalized medicine is a way of tailoring medicine to groups of patients and individual patients,” commented Paul Billings, director and chief scientific officer at the new Genomic Medicine Institute. “The return on investment is fewer adverse events, better treatments, shorter hospital visits and better outcomes,” he further adds. [Biotechs: More Acquisitions and Specialized Drugs.]

The U.S. personalized medicine market is calculated to be worth around $232 billion today, and it is expected to grow 11% annually to more than $450 billion by 2015. Enticed by high returns on relatively lower costs, big pharmas are also beginning to shift their focus to this market, away from blockbuster drugs.

According to the recently released MoneyTree report based on data from Thomson Reuters, biotech investments only dropped 19% in 2009, but the sector was still the largest investment sector for the year with $3.5 billion going into 406 deals, writes Marie Daghlian for Seeking Alpha.

In line with that, we could see more IPOs and more small firms raising money, including:

  • Ironwood Pharamacuticals (NASDAQ: IRWD) may be the first biotech company to launch its IPO for the year, with a set price range of $14 to $16 a share for 16.7 million class A shares, or $250 million worth.
  • GlobeImmune, another rumored candidate to go public, has already raised $17.5 million in Series E preferred stock financing.
  • Liquidia Technologies, has completed a $20 million series C financing.
  • Elevation Pharmaceuticals came out with $30 million in Series A financing.
  • Southborough, maker of software for healthcare payers, raised $120 million in private equity.

For more information on the biotechnology sector, visit our biotechnology category.

  • PowerShares Dynamic Biotech & Genome (NYSEArca: PBE)

  • First Trust Amex Biotechnology Fund (NYSEArca: FBT)

  • SPDR S&P Biotech (NYSEArca: XBI)

  • iShares NASDAQ Biotechnology (NYSEArca: IBB)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.