ETF Spotlight on PowerShares Dynamic Biotech & Genome (PBE), part of a weekly series. Assets: $148 million
Holdings: This fund invests in companies involved in the biotechnology and genome sectors. Some of the top components include ImmunoGen (IMGN), Amgen (AMGN), Gilead Sciences (GILD) and Biogen (BIIB).
Objective
This fund tracks the Biotechnology & Genome Intellidex Index
What’s Good
- The biotechnology sector has created more than 200 new therapies and vaccines, according to a report by BIO
- Biotechnology also benefits farmers and consumers; environmental biotechnology helps clean up hazardous waste
- The market cap of public biotech companies was at $360 billion in April 2008
- The biotech industry has exploded since 1992: revenues rose from $8 billion back then to $58.8 billion in 2006
The Latest News
- Ruben Dagda for The Examiner reports that the biotechnology industry has proven as a safe industry even in these rough economic times. Both the health care and biotechnology industries have been among the least hard-hit in terms of job losses and contraction, although it’s far from recession-proof.
- The Obama administration claims that biologic drugs should be subject to generic competition after seven years, citing the potential for reducing health care costs, Catherine Larkin for Bloomberg. Currently, biologics can’t be copied even if patents have expired because biologics makers say the medicines can’t be replicated like conventional pills can.
- According to the Federal Trade Commission, generic biologics could be sold at 10% to 30% discounts without taking market share away from brand-name companies.
- Investing in the biotech sector requires more due diligence than any other sector because of its unpredictable nature and the potential fallout of overly hyped products, remarks Marc Lichtenfeld with the Smart Profits Report. If you are looking into this sector, you may want to be sure that the potential for profits is worth the risks.
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.