The biotechnology sector was the best performing sector in the last year.
Two main fundamental factors caused this growth: first low interest rate environment and second one new drugs. Biotech ETFs have also benefited previous year from a spate of Food and Drug Administration implementing new business model, cost efficiency, de-consolidation, measures, dividend policy and share repurchase program. The best performing fund was the First Trust Biotech ETF.
It is hard to say if the growth will continue this year. However there are favorable factors for instance: demographics, healthcare policies and new product approvals. What is more, approval of new drugs would be competition for market leaders. Huge companies expect to undermine profitability and pricing power in the industry. For instance: Gilead commands a 58.37% operating margin.
On the other hand, it is good seasonally period for the sector. In addition, 2015 will be another strong year for mergers and acquisition, so companies would probably create synergy effect. In short, late investors may still be able to gain profits on Biotechnology sector.
Here are the charts: http://www.trendsinvesting.com/motif-details/Biotech/one_year/absolute
Biotech, Equity, Health care, U.S.
Trend move: 38.04% Trend start: Monday, 2014-04-07