Biotechnology and pharmaceutical are both complex and rewarding for investors with a long-term view.
Biotechnology and pharmaceutical companies enjoy high growth and margins when a treatment they develop is successful. The product must be adopted by physicians and included on a government’s list of approved treatments.
Before investing into biotech and pharma industry consider what is the life of new and existing patents? Investors should be aware whether competitors have similar treatments undergoing approval. What is the approval Status? Companies with at least one product in end-stage trials are safer investments than those just beginning the investigative phases of development. On average, it takes 12 years, and over US$350 million, to get a new drug from the laboratory onto the pharmacy shelf.
Does the target company have diversity within its pipeline of products? And ultimately what is the size of the market? Whilst investing in companies treating niche ailments can be profitable, the market is far greater in areas such as HIV/AIDS, cancer, heart disease, diabetes, neurological and immunological diseases.
Companies operating in these areas are more likely to attract a takeover bid from big pharma looking to restock their pipelines.