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Pharmaceuticals Benefit from Advances in Biotechnology

One of the sectors that benefits most strongly from advances in biotechnology is the pharmaceutical industry. The drug industry benefits with a larger cash flow once an FDA approval has been received for new advances in biotechnology. To understand how biotechnology affects pharmaceuticals, it's helpful to understand what biotechnology is.

Biotechnology assists in developing useful products; for example, new drugs to help fight a disease or medical concern. It does this by using living organisms as well as biological systems to enhance their effects.

Biotechnology is a cost burden to the drug companies. A majority of the pharmaceutical manufacturing firms invest cash flow into their research and development departments along with paying large dividends to investors. Similar to pharmaceutical firms, biotechnology firms also devote most of their income resources to research and development. In simple terms, with the advances in biotechnology, pharmaceutical companies and biotechnology firms both benefit financially. This means more funding for research and development, which not only increases the productivity but also decreases the wait time that the investors experience in receiving their dividends.

Pharmaceutical firms benefit from advances in biotechnology with large financial rewards if the risks are weighted properly and they take the correct steps. One of the most important factors to consider is whether the FDA is likely to approve a firm's new drug. When biotechnology increases its developments, the FDA's rate of approval increases as well. Biotechnology firms are able to identify more accurately what the FDA does and does not accept.

As recently as 2009, the world was seeing a rising trend in investing in biotechnology equipment by both academic institutions and government. Investment has been on the rise over the past several years. For example, in 2015, the pharmaceutical firm Merck announced its plans to spend $450 million over the next five years in conjunction with NGM Biopharmaceuticals to develop biotech drugs to address several common chronic conditions.

Another factor to consider is that biotechnology firms are able to form and grow fairly quickly once they have received approval from the FDA for a new drug. In 2013, a leading company, Gilead Pharmaceuticals, introduced a drug that became one of the most successfully launched pharmaceutical products in history. One of the contributing factors to the company's rise was the advancement in biotechnology that enabled it to develop the drug quickly and properly.

In conclusion, although pharmaceutical companies have tended to pay smaller dividends to investors than in previous years, there is a noticeable rising trend in the benefits of investing in biotechnology. As biotechnology advances increase, so do investors' profits.

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