Thursday, January 23, 2014

The Bio-tech Revolution for Greater Health and Wealth Continues

Over the past three decades, there has been an outburst in the number bio-tech related patents. This has opened up countless opportunities and redefined entire companies, as well as given rise to many new start-ups. The result, there are now in the region of 5,000 patents on human genes and 47,000 on inventions involving genetic material. 

Despite the belief that asset prices are potentially becoming over valued due to high demand, biotech stocks are among the few that can claim real value. The biotech industry has grown to become the top-performing sector for the last three years, with the principal Biotechnology ETF achieving an incredible gain of 62% last year. Characterised by major breakthroughs and futuristic technology, the biotech sector is highly profitable, and is set to see strong gains again in 2014. 

Three of the largest companies in the biotechnology sector are Celgene Corp., Gilead, and Biogen Idec, all of which saw their stock roughly double last year, and have all been tipped to be among the leaders in biotech again this year. 

One of the problem with drug trials are that they are extremely expensive and lengthy, with the average length of a trial standing at 8 years, and average trial costs now totalling $500-$800 million. This results in a severe delay in the process from when the patent is approved until you would see whether a speculative investment would pay off. 

However, as an example of the positive changes being made, it is now possible to buy specialized cells, which are known to be essential to the trial process. This is as a result of one company that has found, and patented, a sustainable method of producing a compound known as KLH, which is a substance that naturally induces an immune response, and is heavily relied on in the trial process of hundreds of drugs worldwide. Such an advance provides the opportunity to avoid such heavy costs and reducing the time scale for a drug to get from lab to market dramatically.

Following these and many more advances in the industry it is evident that the medical revolution is really taking off and gathering speed, with the opportunity for huge gains for investors. Can biotech be the top-performing sector for the fourth consecutive year? It remains a strong possibility.

After all is said and done, Healthcare is always going to remain a top priority, regardless of economic conditions.

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