Biotech stocks are the shares of biological technology companies, meaning that the foundations for these businesses meet somewhere between technology and biology. In simple terms, biotech companies harness technology to create drugs from biological organisms. Unlike pharmaceutical companies, which develop drugs from chemical processes, biotech companies focus exclusively on the extraction and manipulation of biological organisms.
Usually, newly developed biotech products are required to pass a lengthy testing process, meaning biotech companies can be speculative plays. A drug that has been developed successfully still may take years to impact the company’s profitability. However, the race for a COVID-19 vaccine changed how efficient this process runs, giving companies more access to means of profitability.