The biotechnology sector and exchange traded funds (ETFs) have had a good summer so far. Some funds are up as much as 22% in the last month alone. Will it continue?
July was kind to the biotech sector. The NYSE Biotechnology Sector rose up 24%, which dwarfed the 6% for the S&P 500. Sam Subramanian for iStockAnalyst reports that a host of favorable clinical trial results were the biggest drivers, with a large buyout announcement an even bigger ray of light.
The largest biotech-pharma merger was the Roche-Genetech deal. Meanwhile the Medarax takeover sent shares up 90% after the announcement was made.
Is it too late to jump in?
Subramanian says that there are some factors favoring biotech companies right now:
- An aging population
- Rising cancer rates
- Rising degenerative disease rates
- An increasing understanding that biotechnology offers some of the best solutions for disease management
- The potential for more “blockbuster drugs” is in place
- Biotech companies are looking to expand the uses of some drugs to treat more than just one disease
- Biotech drugs are, to a degree, safe from generic competition
If you do decide that biotech is an area you’d like exposure to, mind the trend lines and have a strategy to protect yourself.
- PowerShares Dynamic Biotech & Genome (PBE): up 18.4% year-to-date
- iShares NASDAQ Biotechnology (IBB) up 10% year-to-date
For more stories about biotech, visit our biotechnology category.
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.