Biotechnology is a process that makes use of living systems and organisms to make products. In the recent years, the biotech sector has been booming with stocks related to the biotech industry appreciating significantly. Technological advancement has resulted in increased efficiency in the manufacturing and experimental processes. There has been a development of applications that integrate technology with biological systems living derivatives and living organisms to create processes and products for particular uses.

Overview

Depending on the tools and applications used, the sector overlaps with biomedical engineering and bioengineering sectors. With the widespread cases of various illnesses and medical conditions, many industries in the biotech sector are striving relentlessly to save lives. The increased demand in the medical products has resulted in the consistent growth of the sector. Biotechnology industries currently focusing on drug development and clinical research for disease and medical conditions treatment are proving to be quite profitable.

In general, biotechnology has four major industrial areas. These include environmental uses, medical (health care), agriculture and crop production, and non-food (industrial) uses of crops. Non-food industries include those that manufacture biofuels and biodegradable plastics. Biotechnology is also important in your daily life because for instance one of its applications is the directed use organisms for manufacture of products like milk derivatives.

The Companies

Many biotechnological companies are not profitable since they specialize in research. The technology comprises of lengthy development lead times. At times, the research can take decades before the end desired product is available for sale. Though the sector is performing exemplarily, there is always an 85-95% likelihood that prospective new drugs fail to meet required standards to be granted approval. Nonetheless, those that are approved are performing exceeding expectations.

The biotech sector is involved in the development of new medical drugs while the pharmaceuticals market and sell these drugs. Thus, the two sectors are significantly interrelated, and none can operate without the other. If you want to create a new drug and create human clinical trials, you need to have approval from the Food and Drug Administration. This body approves new drugs in the United States and requires you to manufacture drugs that are safe and efficacious.

The pharmaceutical and drug manufacturing companies are currently the hottest sectors biotech has to offer regarding significant returns on investment. To reduce operation costs and increase client base, the companies in this sector are forming mergers that have so far proven to be beneficial for all participants. Before you commit your savings and funds into the sector, you must be aware of all FDA requirements and processes. You must come up with sufficient information to ascertain that your drugs are safe and effective for use.

Investors

As a prospective biotech sector investor, there are other factors that you must keep in mind. Make sure that you are well aware of the company’s pipeline that determines the presumed and real projected value of the company. It is advisable for you to invest in companies that have multiple phase 2 drug testing programs. These company types have higher probabilities of succeeding in production of profitable drugs as opposed to that which has a single phase 2 program.

The company with multiple programs is to some extent insured in case one of the drugs fails. You should also be aware that not all diseases are equally valuable. Some diseases have a huge potential market. However, there are many other options already approved hence the huge market is significantly reduced by the competition. The hottest sector of biotech currently comprises of companies that manufacture ‘orphan drugs’ that have few other options making them have long term profits.