Biotechnology uses living organisms to develop cutting-edge medical treatments and drugs to treat diseases and ease human suffering. The biotech sciences include genetics, genetic engineering, gene therapy, applied immunology and bioengineering. Companies that break ground in these areas may profit handsomely. Those that do not may fiscally suffer. The difficulty in predicting which path such companies will take makes the biotech industry notoriously more volatile than the broader stock market. Consequently, investors willing to accept more risk, for the promise of excessively higher returns, may wish to diversify their equity portfolio with a stable of biotech stocks. (See also: The Ups and Downs of Biotechnology)

The Biggest Biotech Stocks

The largest biotech companies by market capitalization currently listed on U.S. stock exchanges are:


Company



Ticker



Specialization / Focus



Market Capitalization ($Billions US)



Gilead Sciences



GILD



HIV/AIDS, liver disease & metabolic issues



88.16



Amgen Inc.



AMGN



Cancer, hematology, inflammatory diseases, nephrology, bone health



121.61



Celgene Corp.



CELG



Cancer and immune & inflammatory diseases



53.85



Biogen Idec



BIIB



Neurodegenerative diseases, hemophilia, autoimmune diseases



60.85



Regeneron



REGN



Protein & antibody therapies



37.93



Alexion



ALXN



Severe and ultra-rare disorders



24.74



Vertex



VRTX



Small molecule drugs



41.68



Illumina



ILMN



Genetic treatments & diagnostics



42.56



Mylan



MYL



Generic & specialty pharmaceuticals



15.74



BioMarin



BMRN



Specialty pharmaceuticals



16.50



Incyte Corp.



INCY



Small molecule drugs



12.95



Alkermes



ALKS



Central nervous system and mental disorders



6.22


Source: Yahoo Finance data as of October 25, 2018.

Biotech ETFs

Biotech stocks can rise or fall, based on a host of company-specific factors like research announcements and FDA clinical trial results. Therefore investors may wish to diversify their biotech exposure by allocating portions of their portfolios to biotech mutual funds or biotech exchange-traded funds (ETFs) such as SPDR S&P Biotech ETF (XBI), iShares Biotechnology Index (IBB), Market Vectors Biotech ETF (BBH) and PowerShares Dynamic Biotech & Genome ETF (PBE). (See also: Buyer Beware in Biotech ETFs.)

The Bottom Line

Biotechnology is on the front line of medical research and technology. Investing in biotech companies can pay off handsomely, given the industry’s potential for high profits, but the high risks associated with these firms can produce substantial losses. An investor can mitigate that risk by investing in mutual funds or ETFs, in order to diversify their biotech holdings.