Biotechnology uses biological processes to solve problems in such areas as health and medicine, agriculture and manufacturing.
When used as a description in investing, a biotechnology company (biotech), is generally distinguished from a pharmaceutical company in that its business is more weighted toward research and development based on biology (the "bio" part of biotechnology), rather than chemistry or pharmacology.
A biotech is often seen as a more risky investment because the investor's focus will be on the pipeline that the company is developing, rather than products that are already approved and on the market. These "pipeline" items or compounds may not ultimately come to profitable fruition in the marketplace. Typically, it can take several years of research, bio-engineering, and testing before a product's efficacy (or lack thereof) is known.
In agriculture, biotechnology refers to crops and products related to the growing of crops that have been genetically modified in the laboratory with the goal of producing crops that have superior characteristics such as being more nutritious or disease- and/or drought-resistant.
Some argue in favor of this practice, pointing to the notion that farmers have been genetically modifying crops for centuries; others consider the use of this science dangerous. The general concern in that regard is for the unknown long-term ramifications and consequences of modifying biology.
Related Fool Articles
Recent Mentions on Fool.com
- 3 Biotech Stocks That Could Grow Faster than Apple
- 4 Industries Where Mergers and Acquisitions May Become the Norm
- 3 Common Pitfalls Biotech Investors Need to Learn to Avoid
- Celgene Corporation Pays Up For Juno Therapeutics Inc. -- The Market Says "Show Me"
- Insiders Love These 3 Biotech Stocks
- 3 Stocks to Buy if Biotech Crashes