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Investing in biotech stocks

An investment in biotech stocks is typically a waiting game — and a gamble.

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Shannon Terrell

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The groundbreaking research being done in this industry has the potential to change the world. But strict government regulations may put a damper on company profits and impact investor returns.

What are biotech stocks?

Biotechnology is the research and application of biomolecular processes. These processes are used to create products and technologies designed to help improve our quality of life and support the planet. How? By helping us combat disease, improve the environment, harness clean energy, enhance food production and devise more efficient manufacturing processes.
Biotechnology stocks are stocks from companies that research and produce biotech products, like pharmaceutical drugs, vaccines, biofuels, genetically modified plants, biocatalysts and more.

How to buy biotech stocks

Here’s what to expect from the investment process.

  1. Choose a stock trading platform. There are many platforms to choose from depending on your needs. If you’re new to investing, consider a beginner-friendly platform like Robinhood or SoFi®. If you’ve got some experience under your belt and plan on performing your own research, explore a platform with comprehensive research tools, like Interactive Brokers.
  2. Open your account. Apply for the type of account you want, whether it’s individual, joint or a retirement account. Note, you’ll need to provide your personal and financial information.
  3. Fund your account. Once your account is open, transfer money. Typically, you can make a wire transfer or an ACH transfer.
  4. Search for stocks. Look up stocks by ticker symbol or use a stock screener to filter the ones you’re interested in. The right biotech stock for your portfolio is a matter of cost, risk and strategy.
  5. Place an order. Once you’ve found an investment you want, specify the number of stocks you want to buy. Some brokers let you buy fractional shares, which can be handy if you have a small account and the stock price is too high. Finally, submit the order.

Biotech stocks

From startups to well-established international corporations, there are numerous options for investors interested in purchasing biotech stocks. See how the following stocks are performing, and view details like market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield.

What ETFs track the biotech category?

For a less targeted and more diverse approach to biotech investing, consider any of the following exchange-traded funds.

  • ARK Genomic Revolution ETF (ARKG)
  • First Trust Amex Biotechnology Index (FBT)
  • Invesco Dynamic Biotechnology & Genome ETF (PBE)
  • iShares Nasdaq Biotechnology ETF (IBB)
  • SPDR S&P Biotech ETF (XBI)
  • VanEck Vectors Biotech ETF (BBH)

Why invest in biotech stocks?

Many biotech products — like pharmaceuticals — are a necessity. And staples like these have proven their capacity to weather down markets.
For example, in the first three months of 2020, the S&P 500 dropped by a sizable 26.7%, while the iShares Nasdaq Biotechnology Index ETF — a fund that tracks US biotech and pharmaceutical companies — only lost 15.6%. And in the past year, the same fund has outperformed the S&P 500’s 10.5% return with a 31.6% return of its own.
The COVID-19 pandemic caused many markets to tank, but stocks in companies looking for effective COVID-19 treatments and vaccines received increased interest. This is just one example of the down-market resilience of the biotech industry.
Biotech stocks can help balance your portfolio during an economic downturn while providing the opportunity for investors to back groundbreaking technology — technology with the potential to alter and improve our way of life drastically. Biotechnology can and has changed the world — and investors can lend a hand in the process.

Risks of investing in biotech

The primary risk factor for biotech investors is the long, arduous and costly process of bringing a concept through research and development to a consumer-ready product.
Many companies in this industry rely on approval from the US Food and Drug Administration (FDA), and the process can take years. There’s no guarantee that a drug in development will reach pharmacy shelves or that a new industrial pesticide will be cleared for public use. Some biotech companies funnel funds into projects that span years with nothing to show for it.
Investors must be willing to wait months or years for biotech stock investments to pan out. And even then, there’s no guarantee of return.

Biotech market projections

By 2025, the global biotech market is expected to reach $775 billion, according to Global Market Insights — an impressive figure considering the market was worth just $399 billion in 2017. Biopharmacy is by far the largest segment of the market, but bioinformatics, bioagriculture and bioservices are also on the rise.
Key market drivers include regenerative medical therapy, genetics in diagnostics and the advancement of artificial intelligence. Analysts forecast that the biotech industry is projected to attain a compound annual growth rate of 7.4% to 8.3% through 2025.

Compare trading platforms

To invest in biotech stocks, you need a brokerage account. Compare features and fees of top accounts to find the best fit for your goals and budget.

8 of 8 results
Finder Score Available asset types Stock trade fee Minimum deposit Cash sweep APY
Finder score
8.2 Great
Stocks, Options, ETFs, Cryptocurrency, Investments
$0
$0
3.25%
No commission stock, ETF and options trades, with 3.9% interest on your options account balance and no options contract fees. See full disclosure.
Important information
eToro securities trading offered by eToro USA Securities, Inc. (‘the BD”), member of FINRA and SIPC. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finder is not an affiliate and may be compensated if you access certain products or services offered by the BD.
$150$150 REWARD
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9 Excellent
Stocks, Options, Mutual funds, ETFs, Alternatives
$0
$0
0.01%
Get up to $1,000 in stock when you open and fund a new account. T&Cs apply.
Trade stocks, ETFs, and options with zero commissions, invest in IPOs or automate your portfolio, with exclusive perks available through SoFi Plus.
Important information
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE Other fees, such as exchange fees, may apply. Please view our fee disclosure to view a full listing of fees. Investing in alternative investments and/or strategies may not be suitable for all investors and involves unique risks, including the risk of loss. An investor should consider their individual circumstances and any investment information, such as a prospectus, prior to investing. Interval Funds are illiquid instruments, the ability to trade on your timeline may be restricted. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA (www.finra.org) /SIPC(www.sipc.org). There are limitations with fractional shares to consider before investing. During market hours fractional share orders are transmitted immediately in the order received. There may be system delays from receipt of your order until execution and market conditions may adversely impact execution prices. Outside of market hours orders are received on a not held basis and will be aggregated for each security then executed in the morning trade window of the next business day at market open. Share will be delivered at an average price received for executing the securities through a single batched order. Fractional shares may not be transferred to another firm. Fractional shares will be sold when a transfer or closure request is initiated. Please consider that selling securities is a taxable event. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire investment Before trading options please review the Characteristics and Risks of Standardized Options Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see https://www.sofi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information SoFi Plus members can schedule an unlimited number of appointments with a financial planner during periods in which the SoFi Plus member meets the eligibility criteria set forth in section 10(a) of the SoFi Plus Terms and Conditions. SoFi members who are not members of SoFi Plus can schedule one (1) appointment with a financial planner. The ability to schedule appointments is subject to financial planner availability. SoFi reserves the right to change or terminate this benefit at any time with or without notice. Advisory services are offered by SoFi Wealth LLC, an SEC-registered investment adviser. Information about SoFi Wealth's advisory operations, services, and fees is set forth in SoFi Wealth's current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Probability of member receiving $1,000 is 0.026%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. Terms and conditions apply*. For 401k rollovers, existing SoFi IRA members must complete 401k rollovers via this link See full terms and For SoFi members without a SoFi IRA, a SoFi IRA must first be opened, and 401k rollover must be completed utilizing Capitalize via this link. SoFi and Capitalize will charge no additional fees to process a 401(k) rollover to a SoFi IRA. SoFi is not liable for any costs incurred from the existing 401k provider for rollover. Please check with your 401k provider for any fees or costs associated with the rollover. For IRA contributions, only deposits made via ACH and cash transfer from SoFi Bank accounts are eligible for the match. Click here for the 1% Match terms and conditions. Must be a SoFi Plus member at the time a recurring deposit is received into your SoFi Active or Automated investing account to qualify. Bonus calculated on net monthly recurring deposits made via ACH and paid out as Rewards Points. See Rewards Terms of Service. SoFi reserves the right to change or terminate this promotion at any time without notice. See terms and limitations. https://www.sofi.com/sofiplus/invest/#disclaimers
$150$150 REWARD
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9 Excellent
Stocks, ETFs, High-yield cash account
$0
$500
3.30%
Get a $50 bonus when you sign up and fund a taxable automated investing account with at least $500. T&Cs apply.
Automate your stock and bond portfolio or trade individual stocks for as little as $1 apiece. Plus, earn 3.50% APY on your cash.
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9.4 Excellent
Robinhood
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9.4 Excellent
Stocks, Options, ETFs, Cryptocurrency, Futures, Event contracts, High-yield cash account
$0
$0
3.35%
Get a free stock when you successfully sign up and link your bank account. T&Cs apply.
Trade stocks, options, crypto and more, with advanced trading tools, fractional shares and exclusive perks for Gold members.
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Zacks Trade logo
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8.2 Great
Zacks Trade
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8.2 Great
Stocks, Bonds, Options, Mutual funds, ETFs, CDs
$0.01
$250
2.83%
Leverage powerful trading tools and low margin rates to trade stocks, options, ETFs, mutual funds and bonds.
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9 Excellent
Public.com
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9 Excellent
Stocks, Bonds, Options, ETFs, Cryptocurrency, Treasury Bills, High-yield cash account
$0
$0
3.3%
Earn a 1% match when you transfer your portfolio to Public. T&Cs apply.
Build a diversified portfolio of stocks, bonds, options, ETFs and crypto, with a high-yield cash account and options contract rebates.
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*Yield as of 04/09/2025. Learn more.
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JPMorgan logo
Finder score
8.4 Great
J.P. Morgan Self-Directed Investing
Finder score
8.4 Great
Stocks, Bonds, Options, Mutual funds, ETFs, Treasury Bills
$0
$0
0.01%
Get a cash bonus up to $1,000 when you open and fund a J.P. Morgan Self-Directed Investing account. T&Cs apply.
Get $0 commission online trades.
Important information
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
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Webull logo
Finder score
9.4 Excellent
Webull
Finder score
9.4 Excellent
Stocks, Bonds, Options, ETFs, Futures, Money market funds
$0
$0
3.35%
Deposit or transfer $100,000+ to earn a 4% Match Bonus, or $2,000+ to earn a 3% Match Bonus. Plus: Get a $100 transfer fee reimbursement on your first brokerage transfer of $2,000 or more. T&Cs apply.
Trade stocks, ETFs and equity options commission-free, with access to futures, advanced charting tools, a robo-advisor and event trading powered by Kalshi.
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Bottom line

Biotechnology is rife with potential but is often subject to strict regulations. Investor funds may be tied up for years, and there’s no guarantee of a return.
To invest in biotech stocks, explore your brokerage account options across multiple platforms for the account best suited for your investment goals.

Frequently asked questions

Do biotech stocks pay dividends?
Yes. Some that do include Amgen and Bio-Techne.

Paid non-client promotion. Finder does not invest money with providers on this page. If a brand is a referral partner, we're paid when you click or tap through to, open an account with or provide your contact information to the provider. Partnerships are not a recommendation for you to invest with any one company. Learn more about how we make money.

Finder is not an advisor or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.

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Editor

Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio

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