Where should I invest? This is a question that runs through most investors’ minds. If you are looking for a feasible investment, however, you should consider investing in biotech. There are a number of viable investment options in biotechnology, and you should take your time to select the most promising option because no investment is guaranteed. Investing in a biotech funds and stocks could see you make lucrative investment returns. This article will provide an overview of investing in biotech, and an analysis of whether it is a worthwhile risk.
Why Invest in Biotech
With biotech companies making a comeback, this would be the ideal time to consider investing in biotech. Looking at the demographic trends, the life expectancy of individuals is expected to increase significantly by 2040, and as people age, they use more prescription drugs. This means that in the near future, the demand for prescription drugs will grow, increasing the returns for biotech companies.
Moreover, biotech companies stocks in the United States have shown nothing short of an excellent record of accomplishment. Assuming that these companies’ stocks will continue with the same upward trend, biotech companies will continue to enjoy high returns on investments.
Biotech companies are getting more innovative, and this sees the companies generate hefty amounts from their successful products. Biotech companies such as Gilead are using their returns to invest in future projects such as the new drug for non-alcoholic steatohepatitis (NASH). The projects have an estimated market size of more than $30 billion, a projection that shows just how lucrative investing in biotech is.
What Biotech Funds to Invest in
Biotechnology companies have started to grab the people’s attention because their stocks are gaining momentum. This implies that investing in biotech shares would be wise. With the new healthcare plans expected to take place, investing in biotech funds could see investors rake in high returns. Here are some of the biotech mutual funds you should consider investing in:
Fidelity Select Biotechnology FBIOX: This fund invests most of its assets in the stocks of biotechnological organizations that are deal with the research and distribution of biotechnological goods. Some of the best biotech companies to invest in this fund include: Inc. ALXN, Alexion Pharmaceuticals, and Regeneron Pharmaceuticals (REGN).
Janus Global Life Sciences AJFNAX is another biotech fund you should consider investing in. This fund invests majority of its assets in the securities of companies that portfolio managers perceive to have a life science acclimation. A biotech company with this fund’s top holdings is Amgen.
Hartford Healthcare HLS IB HBGHX is another mutual biotech fund that you should invest in. This is a fund that invests in the equity securities of biotech companies that deal with healthcare-related matters globally. A biotech company with this fund’s major holdings is Bristol-Myers Squibb Co (BMY).
How much Is the Biotech Industry Worth?
Before investing in biotech, it is important to review the numbers that drive the industry. In 2015 in the U.S, public biotech companies generated revenues of $112.2 billion. In 2016, the number of public biotech companies in the U.S stood at 449.
The top regions in the global biotech industry are Europe and the United States. As of 2015, close to 670 companies in these regions generated $133 billion in revenues related to biotech. United States is the top player, considering that it has close to $108 billion in generated revenue.
Furthermore, the biotech industry in the U.S. employs over 130,000 employees. Some of the top companies in the biotech industry in the U.S include Gilead Sciences, which generated $30.4 billion in 2016, and Amgen, which generated $22.9 billion in 2016. Overall, all the biotech centers in the world generated $139.4 billion.
How to Invest in Biotech Companies
If you are planning to invest in biotech companies, there are a number of things that you should know. One, you need to have a conservative strategy. This means staying with biotech companies that are already established, which have great financials such as Gilead Science and Amgen. The conservative strategy could also involve buying into a biotech fund, which keeps track of the performance in the industry to identify firms that indicate promising returns.
You also need to determine what kind of risk you are willing to take. Before investing in biotech, you have to be sure of the spending limit, keeping in mind that you have no guarantee of return on investment.
If you want to invest in biotech shares, the best way to do it is finding a broker. You have to find a broker who has excellent understanding of how to invest in the biotech industry, and one who is conversant with the leaders in the industry and the stock trends.
Before you invest in a biotech company, you need to be aware that it is a high-risk investment. Therefore, you may need to consider diversifying. This implies that you can venture into another investment to learn the basics of buying and selling stocks. Once you have mastered this, you can do your research and invest in a biotech company whose present returns promise a brighter future.
Another crucial thing that you need to consider before you invest in a biotech company is having a speculative strategy. This strategy helps you to select the top-notch companies in the biotech industry. To do this, you can either assess the companies whose drugs have recently received FDA approval or check on the companies that have drugs that treat stubborn diseases.
Is Biotech a Good Investment?
Early 2014, the biotech industry indicated a weak performance, and this saw many investors pull away. However, the industry has taken a turn and is showing an upward trend in its stocks. The upward surge makes it prudent to invest in biotech. The industry is raking in billions of dollars in revenues, and if you have done your homework well on some of the best biotech companies to invest in, you should know the companies that are doing great and acquire their stocks.
However, you need to be wary before making an investment. This is because dealing in stocks is a high-risk investment. You may end up getting high returns from your investment or end up losing your entire investment. If you are a new investor in biotech companies, it will be wise to invest in companies that have top holdings.
Biotech can be lucrative.
The industry has been indicating an upward trend.
Some companies employ technology, clinical plans, and adhere to regulatory requirements to achieve positive outcomes.
This is a high-risk investment.
Product development requires high investment.
The failure rate in drug development remains high.
Biotech companies are now a viable investment, especially after indicating an upward trend in their stocks. Many investors have their eyes on some of the biotech companies with top holdings because investing in them could bring in high returns. However, investors need to be wary of the fact that this is a high-risk investment and if you dive in it, there is no guarantee that you will enjoy the promised returns. If you have any questions about investing in biotechnology companies, feel free to ask. If you have any additional information on the same, you can also share your thoughts and experiences.