Biotechnology is the application of science and technology in order to solve societal problems like climate change and access to natural resources. Biotechnology companies can be classified into different categories depending on the solutions they intend to provide.
The most well-known biotech companies are pharmaceutical companies that create medicines for humans and animals. Drug development is a risky and long process that takes years. 90% of potential medicines never make it to the pharmacy shelves.
Biotech isn’t just limited to pharmaceuticals. It can be utilized in a wide range of industries. Some of them include agriculture, cosmetics as well as food and environmental technology as well as industrial biotechnology, nutraceuticals and products for veterinary use.
Other research areas include mRNA-based vaccines, which were used in the COVID-19 pandemic, and monoclonal antibodies, that are currently being evaluated for HIV treatment. The industry is described as having high operating costs and requires substantial funding to fund R&D.
This is why the majority of biotech companies do not make a profit at the beginning of their development. They typically have strong pipelines and an capability to generate non-organic revenues. Biotech investment can be lucrative however, you must consider the dangers. For instance, it’s not unusual for a biotech stock to see a rout when it is announced that one of its new treatments has been successful, and these spikes can be difficult for investors with small budgets to endure.
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