Asset allocation model
Few industries pique investor interest like the high-risk, high-reward biotechnology sector. It is not unusual for a biotech company’s stock to soar in value following the development of a successful product...even if it is just as likely that tens of millions of dollars in research will lead to nothing substantial. Biotech companies earn headlines for developing lifesaving and (potentially) massively lucrative treatments for illness, but the industry’s scope extends beyond healthcare to food and agriculture, industrial processing, and more. Any company producing technology that incorporates biological organisms falls within the sector. The search for the next big thing in biotech may come with risk, but investors have reason for optimism. Biotech products like DNA sequencing and gene therapy are experiencing increased demand and decreasing prices, while rising populations around the world mean demand for food and agricultural products resistant to environmental factors. Biotech’s biggest names include multinational corporations like Johnson & Johnson, Amgen, and Roche, who each sport market capitalizations in the hundreds of billions of dollars. With new government rules opening China as a market for new treatments, the biotech sector holds significant growth potential – and corresponding profitability for investors.