Terry Smith on the Biotech Industry

TL;DR

Investing in the biotechnology industry is a risky endeavor, with only a one in ten thousand chance of success.

Transcript

another area that's highly regarded from a technological innovation standpoint attracts lots of investors is the drug industry the biotechnology industry investing in biotechnology is an interesting approach in terms of the odds of success most drugs in most regimes have to go through four stages of clinical testing these are the four stages and th... Read More

Key Insights

• ❓ The drug industry, especially biotechnology, attracts investors due to its technological innovation.
• 🦺 Most drug compounds fail the first stage of testing, which assesses their safety.
• 🛩️ Only a small percentage of drugs make it through the later stages of clinical testing.
• 😘 The chances of successfully developing and marketing a drug in the biotechnology industry are statistically low.
• ☠️ The pharmaceutical industry is considered a challenging investment due to its high failure rate.
• 😘 Investors are attracted to industries with lower risks of being disrupted by new technological developments.
• 🖤 The lack of significant technological innovations in elevator systems contributes to their stability as an investment.

Questions & Answers

Q: What are the four stages of clinical testing that drugs have to go through?

The four stages of clinical testing for drugs are: testing for safety, determining if it works, comparing it to existing compounds, and examining additional benefits or uses.

Q: What is the failure rate for the first stage of clinical testing?

Approximately 97% of drug compounds fail the safety testing in the first stage of clinical testing.

Q: Why is investing in biotechnology considered risky?

Investing in biotechnology is risky because the likelihood of successfully navigating all the stages of clinical testing and obtaining FDA approval is low, with only a one in ten thousand chance of success.

Q: Why do people continue to invest in the biotechnology industry despite the risks?

Despite the risks, people continue to invest in the biotechnology industry because of the potential for significant returns if a drug successfully makes it to market.

Summary & Key Takeaways

• The drug industry, particularly biotechnology, is highly regarded for its technological innovation and attracts many investors.

• Most drugs go through four stages of clinical testing, with a high failure rate, before they can be approved.

• Investing in biotechnology comes with significant risks due to the low probability of successfully developing and marketing a drug.