Biotech companies promise a lot.
From cures for cancer and Alzheimer's to the latest 3-D printed organs, biotech always makes the field look exciting and hot — the place you’re sure to make quick, easy money…
Take, for example, scientists who’ve helped quadriplegics. In the past, there has been no hope for those with spinal cord injuries.
That is changing.
Scientists have successfully used stem cells to help six quadriplegics regain their upper body functions. And the lab that originally reported the results reported that six months after the treatments, the six quadriplegics they treated have continued to show improvements.
It’s big news and rightly so. We hear stories like this all the time in the biotech field.
One company is trying to bring brain-dead patients back to life.
Another is trying to cure diabetes.
And another is trying to remove genetically inherited diseases from DNA.
But here’s the problem: Biotech companies promise a lot but many deliver little.
You see, biotech companies can spend years and millions of dollars researching and developing drugs. Many times, this leads nowhere — the clinical trials fail and the FDA must reject them.
Failed FDA trials often mean that the stock price will drop between 50% and 80% the next day.
Make no mistake, the biotech field is growing by leaps and bounds. Grand View Research estimates that the global market for biotech will reach over $600 billion by 2020.
That’s a lot of money.
And it wouldn’t make sense to ignore all investments in biotech simply because they’re speculative.
The Refinery of Biotechs
Oil rides ups and downs like no other. It can be $100 a barrel one day and $27 the next. Do you know how you ride that out? You invest in oil refineries.
Oil always needs to be refined, so no matter what the prices are, it will go through refineries. When you invest in oil refineries, you invest in the oil market without having to invest in oil directly.
You can do that with biotech, too.
You see, there’s something that all labs have in common — they need supplies. And there are companies that specifically supply biotech supplies to biotech companies. This means that you can invest in the field of biotech without investing in biotech companies directly.
Seems like a pretty good deal, right?
That’s where these three companies come in...
Fluidigm Corporation (NASDAQ: FLDM)
Fluidigm Corporation creates, manufactures, and sells technologies and life science tools that focus on analysis and explorations of single cells, as well as some industrial applications of genomics.
It provides supplies to schools, biotechnology, pharmaceutical, and agricultural biotechnology companies.
Its first-quarter report shows that its revenue for mass cytometry from instruments, consumables, and services was up 40% from the previous year.
It also started to ship its Advanta Immuno-Oncology Gene Expression Assay, which helps screen markers for tumor immune responses.
Thermo Fisher Scientific Inc. (NYSE: TMO)
Thermo Fisher Scientific provides instruments, software, and equipment for discovery, diagnostic, and research labs.
It provides blood tests for asthma, allergy, and autoimmune diseases, and also tests for cancer diagnoses.
It has a large market cap of $67.329 billion and it's had a solid year, jumping from lows of $141.10 all the way to current highs of $172.10.
Its first-quarter report showed its revenue up 11% to $4.77 billion, with its Life Sciences Solutions segment up 12% and Laboratory Products and Services segment up 3%.
Integra LifeSciences Holdings Corporation (NASDAQ: IART)
Integra LifeSciences Holdings Corporation focuses on developing and providing surgical implants and medical instruments for use in general surgery, neurosurgery, and reconstruction surgeries.
While it doesn't provide lab instruments like the two stocks above, it provides instruments to a wide variety of medical offices and hospitals and as such, will always have a market for its products.
Its first-quarter report showed that revenue is up 9.2%, with operating cash flow up 15.4%, and its Orthopedics and Tissue Technologies segment up 19.6%.