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Investing in the Biotech Industry
Biotechnology is the application of science and technology in order to solve societal problems like climate change mitigation and access to natural resources. Biotechnology companies are classified into different categories depending on the solutions they offer.
The majority of biotech companies are pharmaceutical companies that make medicines for humans and animals. Drug development is a risky and lengthy process that can take many years. 90% of potential drugs don’t make it onto the shelves of pharmacies.
Biotech isn’t just limited to pharmaceuticals. It can be utilized in a wide range of industries. These include cosmetics, agriculture and food technology. Industrial biotechnology, nutraceuticals and veterinary products are also included.
Other areas of research include mRNA vaccines, which were used in the COVID-19 Pandemic, and monoclonal antibodies that are currently being evaluated for HIV treatment. The industry is characterized by high operating costs and significant funding for R&D.
Most biotech companies do not make money in the initial stages. The ones that are profitable have strong pipelines, and they can also generate non-organic revenues. Biotech investing can be rewarding however, it is important to be aware of the risks associated with it. For example, it is not uncommon for biotech stocks to see a rout due to the news that one of its latest treatments has been successful, and these spikes can be difficult for investors with small budgets to endure.
