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Biotechnology: On The Edge of Another Explosion

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Biotechnology: On The Edge of Another Explosion

On the most fundamental level, biotechnology is any technology or product developed using cellular and biomolecular processes. The products as simple as bread and cheese could be considered biotech innovations. Today, the biotech field has expanded substantially, and those involved in it are making significant strides towards solving some of the world’s greatest problems.

Biotech stocks went into one of the greatest abyss in their history which started last summer. However, as they are going down, there are still hope for their recovery.

The three years of running which let it more than quadruples its by value on its highest point last July, IBD’s Medical-Biomed or the Biotech Industry Group surprisingly went down 50% early this February. It was affected by recoils against hike up of drug prices and mergers that are looking for safer with lower taxes.

Despite this downfall, the group has regained 12% since this February 11 low together with some stocks leading better that that as mentioned.

The rise of the stock under Biotech was driven by the first wave of biotech innovation when companies like Amgen and Roche‘s (RHHBY) Genentech proved that biotechnology could produce blockbusters. Vandeventer says that innovation will remain the key to maintaining pricing power, even under political pressure. Despite much political criticism of Sovaldi’s high price, no one could stop it because the drug was superior to anything else on the market.

Signs and indicators that even generalist investors conclude biotech stocks have become cheaper. During the first quarter, a common lament was that every biotech stock got punished for bad news, but this news does not have a bearing at all. But when Biogen issued a mixed earnings report that drew mostly negative reactions from Wall Street on April 21, its stock rose more than 5%.

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