About Drug and Biotech Stocks

Drug and biotechnology stocks have experienced significant volatility since they peaked in 2000. Many of the stocks are down from their all-time highs and may offer good buys for long-term investors. Most of the major drug companies pay reliable dividends.

Major Drug Companies

Major drug companies develop, manufacture, market and sell branded (patented) drugs and services. Many of these companies spend billions of dollars per year on research and development to ensure a steady supply of new drugs. Some of the leading drug companies are: Phizer (PFE), Merck (MRK), Johnson & Johnson, (JNJ), Eli Lilly (LLY), Bristol-Myers Squibb (BMY), Schering-Plough (SGP), Wyeth (WYE), GlaxoSmithKline (GSK), and Novartis (NVS). These are established companies and most of them have long records of increasing earnings and dividends. Consider one or more of these stocks as part of a dividend reinvestment portfolio. Read Portfolio of Drug and Biotech Stocks for more information about drug and biotech stocks.

Pharmaceuticals Index

The AMEX Pharmaceuticals Index (^DRG) includes 15 large drug companies like Phizer (PFE), Merck (MRK), Johnson & Johnson (JNJ), Amgen (AMGN) and Eli Lilly (LLY). The index peaked in 2000, declined and is in a sideways price pattern.

Generic Drug Companies

Generic drug companies manufacture and market drugs that have gone off patent. Many of generic drugs are less expensive than the original drug they mimic. Because many patents of huge selling branded drugs are expiring soon, the generic drug industry is growing rapidly.

A few of the large generic drug makers include: Barr Laboratories (BRL), Teva Pharmaceutical Industries Ltd. (TEVA), IVAX Corp. (IVX), Mylan Laboratories Inc. (MYL) and Watson Pharmaceuticals Inc. (WPI).

Biotechnology and Smaller Drug Companies

Biotech and small drug companies research and develop new drugs and drug discovery procedures. Much of the work of biotech and small companies overlaps the work of the large pharmaceutical companies. Some of the large biotech companies include: Amgen (AMGN), Biogen (BGEN), Chiron (CHIR), Genzyme (GENZ), Genentech (DNA), MedImmune (MEDI) and Millennium Pharmaceuticals (MLNM).

The Amex Biotechnology Index

The Amex Biotechnology Index (^BTK) includes 17 biotech companies, many of which are large. The index is on the price upside.

The Nasdaq Biotechnology Index

The Nasdaq Biotech Index (^NBI) includes 152 small to large biotech companies. The index is in a sideways price pattern.

Posted January 2, 2007.