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Best Biotech Stocks (2022)

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Biotech stocks top 10

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9
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$190.117B
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10
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Best Biotech Stock To Buy In 2021 | Investing in Biotechnology

In 2020, the book coronavirus-related pandemic known as the Covid-19 threw the industry into sharp relief. However, it was also an outlier owing to the unprecedented assistance from the US government through Operation Warp Speed (OWS). Biotech investors know that pharmaceuticals go through a long, thorough, and costly testing procedure.

  • Even after a medicine has reached the Food and Drug Administration’s (FDA) approval stage, it must still be accepted by the US Food & Drug Administration to go on sale.
  • This is a hard pill to swallow for many people, as well. The harsh reality of the biotech business is that many drugs will never reach the market, adding another layer of risk to any biotech investment. The good news is that there are methods to help you lower your risk by educating yourself on what characteristics to look for in stocks to buy.

Benefits of investing in Biotech stocks

The Biotech industry serves as a good example of the risk-reward trade-off in equities. The biotechnology sector is concerned with developing medicines and treatments for deadly diseases. Many of these firms are small caps. Some are even penny stocks (meaning their stock is worth less than $5).

Why are biotech companies so popular?

Biotech equities are popular because, if these firms succeed in bringing a product to market, their stock price might nearly double or more within a few days. On the other side, perhaps no other sector is so hazardous.

  • The fact is that several of the goods produced by these businesses never make it past clinical trials, or are approved by the FDA. And that implies investors may easily lose the bulk of their money.

In this guide, we’ll define what a biotech firm is and how it differs from (and, in some cases, resembles) a pharmaceutical company. We’ll also offer you some practical suggestions to assist you pick a Biotech stock.

Difference Biotech Company And Pharmaceutical Company

The biotechnology and pharmaceutical industries are siblings rather than twins. One important difference between the two is that investing in pharmaceutical businesses is about what is presently available, whereas biotech stocks are concerned with what may be developed in the future.

This alters both the risk profile and return potential for each industry.

Most pharmaceutical companies pay dividend and are profitable

A pharmaceutical firm earns revenue from commercially available goods that are in production. Because of this, pharmaceutical firms are typically profitable and, in some circumstances, pay out investors a dividend, which can make up a significant portion of an investor’s returnPharmaceutical stocks are often expensive, and have lower chances of extreme profits compared to biotechnology stocks.

Most biotechnology companies are small cap stocks

A biotechnology firm, on the other hand, is more research-oriented and uses science to develop a potential therapy or vaccine. Many of these firms are small-cap stocks that aren’t profitable. Even the tiniest portion of those that seldom pay a dividend.

  • Another distinction is that pharmaceutical companies spend a great deal of money in marketing and sales. On the other hand, Biotech companies see their strength as being in research and development (R&D).
  • Where the two sectors overlap is that pharmaceutical companies are increasingly pulling back from research and are looking to partner with Biotech firms for innovation. This helps create an opportunity for investors who know what to look for in a Biotech stock.

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How to invest in Biotech stocks?

The easiest and more popular way to invest in Biotech stocks is to buy stocks of individual companies. However, investing in an exchange-traded funds (ETFs) can be a smart way to manage the inherent risk of this sector. There are several Biotech ETFs that track an index (a basket) of Biotech stocks. Some of the most popular Biotech ETFs are:

  • S&P Biotech Select Industry Index (INDEXSP:SPSIBI)
  • NYSE Arca Biotechnology Index (INDEXNYSEGIS:BTK)
  • NASDAQ Biotechnology Index (INDEXNASDAQ:NBI)
  • iShares NASDAQ Biotechnology ETF (NASDAQ:IBB)

Are Biotech stocks a good investment?

Biotech stocks have the potential for significant investment gains if a product is deemed effective and safe. However, Biotech stocks also come with risks due to the possibility that some products under development may never make it to market.

What does a Biotech company do?

We define a Biotech company in this way; a company that uses live organisms or their products, such as bacteria or enzymes, to manufacture drugs. Whereas pharmaceutical companies use only chemical – and generally artificial – materials to create drugs.

Can you make money on Biotech stocks?

Investing in Biotech companies might not be for the faint of heart, but it isn’t an impossible industry for the average investor to profit in. Smart investing in Biotech can actually be rather lucrative if you buy the best stocks.

What Biotech stock is Jeff Bezos investing in?

Jeff Bezos has invested in an anti-aging Biotech startup, a report says. An anti-aging research company called Altos Labs was founded earlier this year. 

Sources told MIT Tech Review the company claims Jeff Bezos as one of its investors.

Are pharmaceutical stocks a good investment?

Since many pharmaceutical companies pay attractive dividends, these types of stocks are well-suited for income-focused investors. However, the significant cost and long elapsed time between drug discovery and approval are what make investing in pharmaceutical stocks relatively risky.

What Biotech stock is Warren Buffett buying?

Warren Buffett’s Berkshire Hathaway has bought 648,447 shares of Biogen at a combined worth of $192.4 million ahead of the FDA filing of a controversial Alzheimer’s drug.

Is Biotech a good industry?

The bottom line is that pharma/Biotech is a major jobs provider in the world, and the employment outlook is good for well-qualified job seekers in this industry. If you’re aware of these, you’ll be better prepared to meet any challenges that come your way once you’re in the industry.

Is Biotech the same as pharmaceutical?

Biotechnology and pharmaceutical companies both produce medicines, but the medicines made by Biotechnology companies are derived from living organisms while those made by pharmaceutical companies generally have a chemical basis. The coining of the term biopharma further complicates matters.

Why you should invest in Biotech?

Biotech and biopharmaceutical firms are some of the most exciting (and rewarding) stocks to invest in today. Not only will your investments be likely to make money, but they’ll also assist patients with deadly illnesses such as Alzheimer’s disease, AIDS, and various cancers. Under the oncology umbrella,

What is the number one Biotech stock?

AGIO, MRVI, and OCGN are top for value, growth, and momentum, respectively. The Biotechnology industry includes companies that develop drugs and diagnostic technologies for the treatment of diseases and medical conditions.

How are Biotech companies funded?

Today, early-stage Biotech financing is almost exclusively carried out via the “venture creation approach.” In this method, the VC firm creates the company. The startup is generally kept in the VC’s offices before being incubated. The VC makes a large investment up front and takes a controlling ownership position.

How to Select a Biotech Stock

There’s no way to eliminate the danger from biotech equities. However, there are a few things you can do to balance your risk.

1. Look for a biotech sector that is getting traction

This refers to a firm engaged in medical research for an illness or condition that affects a significant number of people. These, however, are the firms you should be searching for as an investor because their goods will have a high consumer demand. The obvious reason is that companies that succeed would have a quicker ROI.

  • The time to market for a new drug is about ten years, according to the FDA. During the Covid-19 epidemic, firms developing vaccine candidates swelled. Investors can also seek for Biotech enterprises that are developing therapies for cancer, AIDS, heart disease and other illnesses.
  • Another incentive to seek for a hot topic of study is that it may lead to breakthrough “orphan” medicines and treatments, which are usually kept from competition for many years if they are the first.

2. Look at the collaborations of the biotech stock

Many Biotech companies are small-cap companies. This can help them maintain a singular focus. However Biotech development is expensive and when smaller companies form collaborations with other companies, it can help provide financial and logistical support. And if one collaborator is good, more is better.

  • Cash is the name of the game, as with many investment possibilities. The quick pace at which numerous Covid-19 vaccines were created demonstrates how lengthy it takes to bring a product to market. And that means you should be hunting for firms with a large financial cushion.
  • Secondary share offerings are popular among small-cap Biotech companies. This can work. However, it comes at a cost of share dilution. Investors should raise a red flag for businesses that have to continually offer shares.
  • It’s natural to look for firms that have lots of cash and aren’t overly reliant on debt in addition to those that have plenty of cash. Companies with a lot of debt are frequently compelled to raise more money, which can result in an unhealthy cycle.

3. Look for stocks with a deep pipeline of products that are in clinical trials

There are many biotech firms that develop just one product candidate. However, for investors, this is a high-risk, high-reward gamble. If the product fails, a firm may have no other way to recoup its R&D expenditures. However, having numerous products in development allows businesses to take more bites of the apple.

  • Investors are also looking for a long pipeline and market-ready goods. A large pipeline is one thing, but eventually a firm must be able to produce a product.
  • The first stage is to complete clinical trials on human patients. That, however, is simply the beginning. The product must be approved by the US Food and Drug Administration (FDA). And that might take some time.
  • Getting a drug through clinical testing, on the other hand, is an indication that a product will hit market sooner rather than later.

4. Look for Biotech stocks that have the potential to rebound quickly

These are typically firms whose stock is being sold as a result of temporary negative news. The creation of a medicine is, by nature, time-consuming. Many speculative investors will trade on the information as it develops.

  • Investors may capitalize on a temporary fall in share price by purchasing on the dip. Of course, you must believe that the news is entirely irrelevant. If that’s the case, investors might take advantage of these occasions to buy more shares.

5. Have trust for management

It’s critical that the management team include both business-savvy entrepreneurs and individuals with scientific or medical expertise.

It also ensures that the firm will be able to devote resources to the most promising items while also being capable of properly interpreting research data and making adjustments as needed.

Top 5 best biotech stocks

Experts from Reportlab think the best biotech stocks of 2021 are:

  1. Gilead Sciences
  2. Amgen
  3. Lineage Cell Therapeutics
  4. Biogen Idec
  5. Regeneron Pharmaceuticals

1. Gilead Sciences

This biotech company is best known for its antiviral drugs, which tackle the effects of HIV and hepatitis C. The company has also begun to branch out into cancer treatment. Read more about buying Gilead stocks here.

2. Amgen

The California biotech firm specializes in the manufacture of biopharmaceuticals. Amgen’s products are principally used in the treatment of cancer (Neupogen, Aranesp, and Epogen) and inflammation (Enbrel, Humira). Read more about buying Amgen stocks here.

3. Lineage Cell Therapeutics

Lineage Cell is a young biotech firm that specializes in stem cell research. Lineage has an extensive pipeline of potential products. Having already completed clinical trials, its current focus lies on the development of Treg cells for autoimmune diseases. Read more about buying Lineage Cell Therapeutics stocks here.

4. Biogen Idec

This Massachusetts-based company is principally a manufacturer of drugs for the treatment of multiple sclerosis, including Tecfidera, Avonex, and Tysabri. Read more about buying Biogen stocks here.

5. Regeneron Pharmaceuticals

This New York-based company is a specialist in ophthalmology (eye diseases) and oncology (cancer). The company’s leading product is Eylea, a treatment for wet age-related macular degeneration. Read more about buying Regeneron Pharmaceuticals stocks here.

When looking to invest in biotech stocks, it is important to carefully consider the individual companies. The five firms profiled here are all leaders in their respective fields, and each has a very good chance.


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Conclusion investing in Biotech stocks

Investing in biotech stocks can be one of the most profitable fields for risk-tolerant investors. Biotechnology firms are developing new medicines for life-threatening diseases.

If these firms are able to produce a substance successfully, the stock price (which is trading as a penny stock) of its corresponding company can double, triple, or even grow even higher.

Risk with investing in Biotech stocks

Drug approval is difficult and expensive. And merely obtaining a product through clinical trials isn’t enough. There is still a regulatory process with the FDA to complete. And, unlike the rapidity with which Covid-19 vaccines have been given the green light, this may also take some time.

  1. Investing in biotech companies necessitates a thorough understanding of not just financial principles but also the science and medicine behind the firm.
  2. Individuals with scientific and medical backgrounds may have an edge in separating the pretenders from the prospects.


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The safest and easiest way to buy biotech stocks is by using a regulated broker like eToro. You can open an account with the platform, make a deposit and buy this investment all in under 5 minutes from start to finish.

You will first want to find a licensed broker that supports biotech stock. One of our favourite brokers, eToro for example, allows you to make investments into this asset from just $25 and only charges you the spread. Another option is using a regulated broker like DEGIRO or Interactive Brokers. You can open an account with these brokers and start buying or trading biotech stocks in a safe and complete environment.

As with any other asset, there is an element of risk associated with buying biotech stocks. Therefore, you will want to study the market and make a decision based on your financial standing and the risk you are willing to take.

You can trade stocks by first opening an account with a regulated platform and making a deposit in US dollars, EUROs or other currency. Next, search for biotech stock and choose from a buy or sell order – depending on whether you think the stock asset will rise or fall in value. If you speculated on biotech stocks correctly, you will have made a profit. The size of your trading profit will ultimately be determined by your stake and at what percentage your position grew.

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Freddy Agard
Freddy Agard

Freddy Agard writes daily about financial products and specializes particularly in the equity markets. He is happy to tell you more and enjoys reducing complex material to manageable and understandable information. Questions? Leave a comment at the bottom of the page!

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