Biotech has an important place in the world. After all, the research being done can help people. But strict government regulations may put a damper on company profits and impact Australian investors' returns on biotech stocks.
What is biotech?
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.
Each time you take an antibiotic, drink a glass of wine or admire the newest designer dog breed on social media, you’re encountering biotechnology at work.
Biotechnology stocks are stocks from companies that research and produce biotech products, such as pharmaceutical drugs, vaccines, biofuels, genetically modified plants, biocatalysts and more.
But they come with a lot of risk. After all, you have to invest in the research to create the biotech product, without a guaranteed return on investment.
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.
This can be especially effective during 2022's downturn.
Just look at recent history to the last major downturn.
While admittedly it was caused by a health issue, in the first 3 months of 2020, the S&P 500 dropped by a sizeable 26.7%, while the iShares Nasdaq Biotechnology Index ETF – a fund that tracks US biotech and pharmaceutical companies – only lost 15.6%.
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 Australian investors to back groundbreaking technology that has the potential to alter and improve our way of life drastically. Biotechnology can and has changed the world – and investors in Australia can lend a hand in the process.
For our top picks, we compared our Finder partners using a proprietary algorithm beginning in 2023. We update the list every 3 months. Keep in mind our top picks may not be the best for your individual circumstances and we encourage you to compare for yourself. Read our full methodology here to find out more.
Risks of investing in biotech stocks
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.
The scramble for a COVID-19 cure demonstrated the potential instability of biotech investment. As dozens of companies rushed to develop a viable vaccine, stocks in this sector saw a volatility surge as investors queued to back the right racehorse. But few players won and once vaccines got approved, the other companies fighting to be first saw a drop in share prices.
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 US$775 billion, according to Global Market Insights – an impressive figure considering the market was worth just US$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 7.4–8.3% through to 2025.
Investing in the biotech industry
From startups with high hopes to well-established international corporations, there are numerous options for investors in Australia interested in purchasing biotech stocks.
Company summary
CSL Limited researches, develops, manufactures, markets, and distributes biopharmaceutical and vaccines in Australia, the United States, Germany, the United Kingdom, Switzerland, China, and internationally. The company operates through CSL Behring, CSL Seqirus, and CSL Vifor segments. The CSL Behring segment offers plasma products, gene therapies, and recombinants. The CSL Seqirus segment provides influenza related products and pandemic services to governments. The CSL Vifor segment offers products in the therapeutic areas of iron deficiency and nephrology. The company also licenses CSL intellectual property. CSL Limited was founded in 1916 and is headquartered in Melbourne, Australia.
PolyNovo Limited develops medical devices in the United States, Australia, New Zealand, the United Kingdom, Ireland, Singapore, and internationally. The company offers NovoSorb Biodegradable Temporising Matrix, which is used in a fully debrided clean surgical wound to physiologically close the wound. It is also developing hernia devices for hernia repair and solution for ventral hernia and complex abdominal wall reconstruction; NovoSorb Dermal Beta Cell Implant to host pancreatic islet cells in the skin; NovoSorb MTX for the treatment of varying complex wounds; and plastics and reconstructive device product. The company was formerly known as Calzada Limited and changed its name to PolyNovo Limited in November 2014. PolyNovo Limited was incorporated in 1998 and is headquartered in Port Melbourne, Australia.
Mesoblast Limited engages in the development of regenerative medicine products in Australia, the United States, Singapore, and Switzerland. The company offers products in the areas of cardiovascular, spine orthopedic disorder, oncology, hematology, and immune-mediated and inflammatory diseases. Its proprietary regenerative medicine technology platform is based on specialized cells known as mesenchymal lineage cells. The company offers Remestemcel-L that is in Phase III clinical trials for the treatment of systemic inflammatory diseases, including steroid refractory acute graft versus host disease, acute respiratory distress syndrome, and biologic refractory inflammatory bowel disease; and Remestemcel-L, which is in Phase III clinical trials to treat chronic heart failure and chronic low back pain due to degenerative disc disease. It is also developing MPC-300-IV to treat biologic refractory rheumatoid arthritis diabetic nephropathy; and MPC-25-IC for the treatment or prevention of acute myocardial infarction. It has strategic partnerships with Tasly Pharmaceutical Group to offer MPC-150-IM for heart failure and MPC-25-IC for heart attacks in China; JCR Pharmaceuticals Co. Ltd. to treat wound healing in patients with epidermolysis bullosa; and Grünenthal to develops and commercializes cell therapy for the treatment of chronic low back pain. The company was incorporated in 2004 and is headquartered in Melbourne, Australia.
Historical performance
Stock information
Market capitalization: $1312425984
PEG ratio: 0
Company summary
Clinuvel Pharmaceuticals Limited, a biopharmaceutical company, focuses on developing and commercializing treatments for patients with genetic, metabolic, and life-threatening disorders in Australia, Europe, the United States, Switzerland, and internationally. Its lead drug candidate is SCENESSE, a systemic photoprotective drug for the prevention of phototoxicity in adult patients with erythropoietic protoporphyria (EPP). The company's pipeline products include CUV9900, an alpha-melanocyte stimulating hormone analogue; Parvysmelanotide (VLRX001), which provoke prolonged cellular activity; and PRÉNUMBRA, a liquid injectable formulation of afamelanotide. The company was founded in 1987 and is headquartered in Melbourne, Australia.
Historical performance
Stock information
Market capitalization: $778112000
P/E ratio: 27.2456
PEG ratio: 0
Dividend yield: 0.0032%
Company summary
Telix Pharmaceuticals Limited, a commercial-stage biopharmaceutical company, focuses on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals for cancer and rare diseases in Australia, Belgium, Japan, Switzerland, and the United States. The company offers Illuccix for the treatment of prostate cancer; and TLX66-CDx for the treatment of imaging osteomyelitis. Its products candidates include TLX591, a radio antibody-drug conjugate for the treatment of prostate cancer; TLX250-CDx for the treatment and diagnosis of renal (kidney) cancer; TLX101-CDx for brain (glioma) cancer; TLX66-CDx to treat bone marrow conditioning; TLX300-CDx for the treatment and diagnosis of soft tissue sarcoma; and TLX250 for the treatment of clear cell renal cell carcinoma. The company also develops TLX101 for the treatment of glioblastoma (brain cancer); TLX66 for the treatment of bone marrow conditioning; TLX300 for the treatment of soft tissue sarcoma; and TLX592, a prostate cancer therapy candidate for targeted alpha therapy. Telix Pharmaceuticals Limited was founded in 2015 and is headquartered in North Melbourne, Australia.
Historical performance
Company summary
Opthea Limited, a clinical stage biopharmaceutical company, engages in the development and commercialization of therapies primarily for eye disease in Australia. The company's development activities are based on the intellectual property portfolio covering Vascular Endothelial Growth Factors (VEGF) VEGF-C, VEGF-D, and VEGF Receptor-3 for the treatment of diseases associated with blood and lymphatic vessel growth, as well as vascular leakage. Its lead product candidate is Sozinibercept (OPT 302), a soluble form of vascular endothelial growth factor receptor-3 "VEGFR-3", currently under Phase 3 clinical development as a novel therapy for wet age-related macular degeneration and diabetic macular edema. The company was formerly known as Circadian Technologies Limited and changed its name to Opthea Limited in December 2015. Opthea Limited was incorporated in 1984 and is based in South Yarra, Australia.
Historical performance
Company summary
Starpharma Holdings Limited, a biopharmaceutical company, engages in the research, development, and commercialization of dendrimer products for pharmaceutical, life-science, and other applications worldwide. The company offers VivaGel BV, a non-antibiotic vaginal gel for the treatment of bacterial vaginosis and prevention of recurrent BV; VIRALEZE, an antiviral nasal spray; and VivaGel condom, an antiviral condom. It is also involved in the development of DEP cabazitaxel that is in Phase 2 clinical trial for the treatment of prostate and other cancers, DEP docetaxel that is in Phase 2 clinical trials for the treatment of colorectal and other cancers, DEP irinotecan that is in Phase 2 clinical trials f for the treatment of pancreatic and other cancers; and EP gemcitabine, DEP HER-2 ADC, and DEP HER-2 radiotherapy completed preclinical trials for the treatment of solid cancers. In addition, the company's DEP radiotheranostics development pipeline includes DEP HER2-zirconium, a HER2-targeted radio diagnostic for HER2-positive cancers, such as breast and gastric cancer; and HER2-targeted DEP SN38 ADC, a targeted ADC therapeutic for the treatment of human ovarian cancer. Starpharma Holdings Limited was incorporated in 1997 and is headquartered in Abbotsford, Australia.
Historical performance
Stock information
Market capitalization: $39587808
PEG ratio: 0
Company summary
Paradigm Biopharmaceuticals Limited engages in the research and development of therapeutic products for human use in Australia. It offers pentosan polysulfate sodium drugs in the injectable form for the treatment of osteoarthritis, mucopolysaccharidosis, ross river virus, chikungunya virus, chronic heart failure, allergic respiratory, and acute respiratory distress syndrome diseases. The company was incorporated in 2014 and is based in Melbourne, Australia.
Historical performance
Company summary
Imugene Limited, a clinical stage immuno-oncology company, develops a range of immunotherapies to activate the immune system of cancer patients to treat and eradicate tumors in Australia. Its lead product is HER-Vaxx, a HER2-positive cancer vaccine that stimulates a polyclonal antibody response against HER2/neu receptors in gastric and breast cancer. The company's HER-Vaxx is in phase 2 for gastric cancer; VAXINIA is in phase 1 MAST trial for patients with metastatic or advanced solid tumours; and CHECKvacc oncolytic virotherapy is in phase 1 clinical trial against metastatic triple negative breast cancer. It also engages in developing PD1-Vaxx, a cancer vaccine that aims to induce the body to produce polyclonal antibodies that block PD-1 signalling and is in phase I trial; CF33, a combination of genomic sequences from various vaccinia virus strains to generate potent virus; and CF33 CD19 chimeric antigen receptor T cells therapies to target solid tumours. The company has a collaboration with Arovella Therapeutics Ltd to test the integration of Arovella's CAR19- iNKT cell therapy with the onCARlytics platform; and a license agreement with Precision Biosciences Inc. to acquire azer-cell allogeneic CD19 CAR Tcell therapy program. Imugene Limited is based in Sydney, Australia.
Historical performance
Stock information
Market capitalization: $426537248
PEG ratio: 0
Company summary
PYC Therapeutics Limited, a drug-development company, engages in the discovery and development of drug solutions in the areas of RNA therapeutics in Australia. The company's preclinical development programs include VP-001, a drug program for retinitis pigmentosa type 11; PYC-001, a drug program for the treatment of autosomal dominant optic atrophy; and PYC-002 a drug program for the treatment of a severe neurodevelopmental disorder. It also focuses on the development of programs for kidney, neurodevelopmental, retinal, and central nervous system diseases. PYC Therapeutics Limited has academic-industry collaborations with Murdoch University to support drug discovery and development efforts in the field of neurodegenerative disorders. The company was formerly known as Phylogica Limited and changed its name to PYC Therapeutics Limited in November 2019. PYC Therapeutics Limited was incorporated in 2001 and is based in Nedlands, Australia.
Historical performance
Stock information
Market capitalization: $513268832
PEG ratio: 0
Company summary
Immutep Limited, a clinical-stage biotechnology company, engages in developing novel LAG-3 Immunotherapy for cancer and autoimmune diseases. The company is involved in advancing therapeutics related to Lymphocyte Activation Gene-3 (LAG-3), a cell surface molecule that plays a vital role in regulating the immune system. Its LAG-3 immunotherapies are designed to harness and strengthen the power of patients' immune systems to fight cancer and autoimmune disease. Its lead product candidate is eftilagimod alpha (efti or IMP321) for the treatment of different types of cancers. The trials that efi is being evaluated in include TACTI-002, a Phase II clinical trial for the treatment of head and neck squamous cell carcinoma (HNSCC) and non-small cell lung cancer (NSCLC); TACTI-003, a Phase IIb clinical trial to treat HNSCC; and INSIGHT-003, a Phase I clinical trial for the treatment of NSCLC, as well as INSIGHT-005, a Phase I/IIa clinical trial to treat solid tumors. In addition, it offers IMP761, an agonist of lymphocyte activation gene 3 for autoimmune disease; IMP701, an antagonist antibody that acts to stimulate T cell proliferation in cancer patients; and IMP731, a depleting antibody that removes T cells involved in autoimmunity. The company has collaboration agreements with GlaxoSmithKline, Novartis, CYTLIMIC Inc., Merck & Co., Inc., Institute of Clinical Cancer Research, Merck KGaA, and EOC Pharma. The company was formerly known as Prima BioMed Ltd and changed its name to Immutep Limited in November 2017. The company was incorporated in 1987 and is headquartered in Sydney, Australia.
Historical performance
Company summary
Race Oncology Limited, a clinical stage global biotechnology company, focuses on cancer care. Its lead product, bisantrene, is a small molecule anthracene chemotherapeutic. The company is developing bisantrene to address the unmet need of patients across multiple oncology indications, exploring anti-cancer plus cardio-protection. It is also investigating the impact bisantrene and new molecules have on the m6A RNA pathway, following independent research describing bisantrene as the potent inhibitor of FTO (Fat mass and obesity-associated protein). The company is in collaboration with City of Hope, MD Anderson, Sheba City of Health, and UNC School of Medicine. The company was formerly known as Coronado Resources Limited and changed its name to Race Oncology Limited in July 2016. Race Oncology Limited was incorporated in 2011 and is based in Sydney, Australia.
Historical performance
Company summary
AnteoTech Limited develops, commercializes, manufactures, and distributes products for clean energy technology and life science markets primarily in Australia, Asia, Europe, and North America. Its products include AnteoBind ready-to-use applications to streamline and enhance the conjugation process; and AnteoX, an additive that reinforces battery binders helping maximize performance of silicon containing anodes. The company was formerly known as Anteo Diagnostics Limited and changed its name to AnteoTech Limited in November 2019. AnteoTech Limited is headquartered in Eight Mile Plains, Australia.
Historical performance
Stock information
Market capitalization: $51834092
PEG ratio: 0
For a less targeted and more diverse approach to biotech investing, you can also try your hand at this exchange-traded fund.
ETFS S&P Biotech ETF (CURE)
How to buy biotech stocks
Ready to invest in biotechnology? Here's what to expect from the investment process:
1. Research stocks
There are plenty of pure-play biotech companies, some with US roots and others headquartered abroad. The right stock for your portfolio is a matter of cost, risk and strategy.
Take a close look at the company's repertoire of pharmaceuticals and technology. Is it a well-established business with numerous products on the market? Or is the company still waiting to clear its first product for public use?
Do some research to identify which biotech stocks might be a practical fit for your portfolio.
2. Open a brokerage account
The next step in the investment process is to open a brokerage account. There are several online platforms to choose from in Australia and each platform offers a unique blend of features and services for different types of traders.
If you're new to investing, consider a beginner-friendly platform. If you've got some experience under your belt and plan on performing your own research, explore a platform with comprehensive research tools.
3. Purchase stocks
Once you've opened and funded your brokerage account, you can begin the process of selecting and purchasing stocks.
Search for your chosen stock by company name or ticker symbol. Once you've pinpointed the stock, enter the number of shares you'd like to purchase, select your order type and submit the order.
You can monitor the performance of your stocks by logging in to your brokerage account.
Compare trading platforms
To invest in biotech stocks in Australia, you need a brokerage account. Compare features and fees of top accounts to find the best fit for your goals and budget.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
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.
Shannon Terrell is a writer for Finder who studied communications and English literature at the University of Toronto. On any given day, you can find her researching everything from equine financing and business loans to student debt refinancing and how to start a trust. She loves hot coffee, the smell of fresh books and discovering new ways to save her pennies. See full bio
If you’re thinking of investing in gold, our guide will explain how and where to buy gold in Australia as well as the pros and cons of investing in it.
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