Investing in biotechnology companies is a lot like being a venture capitalist: it’s not exactly advisable to put all of your money into one company. Biotech companies come and go, their success or failure often hinging on just on development. For that reason, biotechnology exchange traded funds (ETFs) may be one of the best ways to get exposure to this sector.
The Biotechnology Industry
Biotechnology has been improving our quality of life for generations.
The industry does everything from researching a cure for cancer to finding disease-resistant crops and more. The biotech industry utilizes cellular and biomolecular processes to create breakthrough products and technologies to improve our health, protect the environment, feed the hungry, develop cleaner energy and better manufacturing processes.
Applications include improved treatment techniques in the health care industry, creating more efficient manufacturing processes, decreasing our footprint on the environment and growing higher-yield crops with greater nutritional values.
Because biotechnology companies are often backed by venture capital while they do research and development, they often turn to other ways to earn more cash, including:
- For example, big pharma believes that the next step in generating greater revenue streams is through research and development in niche diseases. If those drugs prove to be successful at treating those diseases, they could potentially be lucrative for their creators.
- Acquisitions have also been hot this year. Large pharmaceuticals are also looking to acquire other companies that specialize in rare diseases since the barriers to entry are high.
The Need for Biotech
The world will always need more research and development, but these days, it seems to be more important than ever before.
For starters, an aging population in the United States and the prevalence of chronic and age-related illnesses will be a major market for these companies.