But some other things have changed, a lot. The overall market has roared ahead while biotech stocks barely budged, creating a vastly wider gap in value, and the biotech industry has had more time to mature. This new-product cycle has a number of pros bullish on the sector. Sensing opportunity, New York investor Stuart Wiesbrod founded Merlin Biomed, a private health-care fund, just three months ago. Yet the biotech industry has 600 drugs in advanced development, vs. maybe 20 for each big drug company.
Biotech companies are notorious for moving ahead with tests too quickly.
The safest approach to biotech is via mutual funds. Vanguard Health, Fidelity Select Health and Putnam Health Sciences have the best three-year returns, according to Lipper Analytical Services. But if you're playing with the speculative part of your portfolio, which is appropriate here, individual stocks pack the big thrill. Naturally, there's no telling if biotech stocks will break out of their slump anytime soon. But if you want to be there when they do, start nibbling now.