State Of The Union Lights Up Biotech

Biotech companies have been in the spotlight over the past few months with many investors considering the sector a goldmine for great investment opportunities. President Barack Obama in Tuesday's State of the Union speech highlighted the need for more investment in medical research, a sign that biotech is set to continue as a hot spot in within the market.

Precision Medicine

Obama pointed out the growing need for new drugs that target specific disease-causing genes. Roche Holding AG is already preparing for the demand; the company acquired Foundation Medicine Inc FMI earlier this year in order to build a research partnership between the two companies. Foundation Medicine has created a new way for doctors to test for specific cancer-causing mutations, and Roche will use those tests to create tailored treatment options.

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Antibiotics

The president also underscored the need for new antibiotics as old strains have begun to grow resistant. This field has been widely abandoned as it wasn't seen as cost-effective for some time. However, a renewed push for modern antibiotics has some smaller firms spending time and money on the cause.

Celestial Biolabs Ltd recently launched a new antibiotic treatment for diabetes, while Cubist Pharmaceuticals Inc. CBST spent $400 million in 2014 on the research and development of new antibiotics.

Orphan Drug Focus

While Obama’s call to action will likely speed up funding for drug research, many companies are still facing price pressure from healthcare providers who want to lower the cost of treatment by pitting one company against another. For that reason, investors are flocking to companies that offer niche products that treat rare diseases and have little or no competition.

BioMarin Pharmaceutical Inc. BMRN is another company that is focused on genetic diseases and has been considered the top orphan drug developer within the space. The company has several drugs already on the market and recently announced plans to acquire Prosensa Holding NV RNA, a company that treats a rare form of muscular dystrophy.