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Biotechnology uses living organisms to develop advanced medical treatments and drugs to treat disease and alleviate human suffering. Biotechnological sciences include genetics, genetic engineering, gene therapy, applied immunology, and bioengineering. Companies that innovate in these areas can benefit greatly. Those who don’t can suffer financially.

The difficulty of predicting the path these companies will take makes the biotech industry notoriously more volatile than the broader stock market. Therefore, investors willing to accept more risk, for the promise of excessively high returns, may wish to diversify their stock portfolio with a stable of biotech stocks.

Biggest Biotech Stocks

The largest biotech companies by market capitalization currently listed on U.S. stock exchanges as of January 11, 2021 are:

Company Teleprinter Specialization / Focus Market capitalization (in billions of US dollars)
Novo Nordisk

NGO Hemophilia, diabetes, obesity 163
Vertex Pharmaceuticals VRTX Cystic fibrosis 61.0
Regeneron Pharmaceuticals RAIN Cancer, allergic and inflammatory diseases, cardiovascular and metabolic diseases 53.4
Modern mRNA Infectious and rare diseases, cancer, cardiovascular diseases 46.4
Alexion ALXN Serious and ultra-rare disorders 34.2
Pharmaceutical royalty RPRX Biotechnology royalties 32.1
Seen NMS Cancer 32.0
Genmab A/S GMAB Antibody products for cancer patients 27.3
BioNTech BNTX Cancer immunotherapy 26.2
BeiGene BGN Cancer


Source: Yahoo! Finance

Biotech ETFs

Biotech stocks can go up or down, depending on a host of company-specific factors, such as research announcements and clinical trial results from the Food and Drug Administration (FDA). 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).

The essential

Biotechnology is at the forefront of medical research and technology. Investing in biotechnology companies can be very profitable, given the high profit potential of the industry, but the high risks associated with these companies can lead to substantial losses. An investor can mitigate this risk by investing in mutual funds or ETFs to diversify their biotech holdings.

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