With the CHIPS Act and Inflation Reduction Act (IRA) safely behind him, President Joe Biden has set his sights on helping grow another sector. Today he signed an executive order for the launch of a new National Biotechnology and Biomanufacturing Initiative, aimed at spurring biotech production on U.S. soil. According to a White House fact sheet, “this Initiative will create jobs at home, build stronger supply chains, and lower prices for American families.” All three goals can boost economic growth if reached. But this is also welcome news for investors. Biotech stocks are rising today on momentum from the news and they are likely to keep trending upward. Investors should pay careful attention to biotech producers based in the U.S.
Let’s take a closer look at what this initiative will bring and which companies stand to benefit.
What This Means for Biotech Stocks
This isn’t the first time that President Biden has zeroed in on the biotech sector. In February 2022, he re-established the Cancer Moonshot, following where he left off as Vice President in 2016. This news helped biotech stocks shoot up if their companies were working on cancer treatments. The list of beneficiaries included Bristol-Myers Squibb (NYSE:BMY) and Eli Lilly & Company (NYSE:LLY), among others. While Biden’s new initiative will likely also help in the fight against cancer, this time around it is even broader.
One of the key factors behind the National Biotechnology and Biomanufacturing Initiative is the goal of reducing the U.S.’s reliance on foreign materials. The White House has recognized that biotechnology has the power to launch another industrial revolution. The U.S. will be best served to benefit if doing most of its production domestically. As the White House Fact Sheet notes:
Bioeconomy remains an American strength—as well as a huge opportunity—given our industries, our innovators, and our robust research enterprise. By responsibly harnessing the full potential of biotechnology and biomanufacturing, we will be able to realize the potential of biology that can make almost anything that we use in our day-to-day lives, from medicines to fuels to plastics, and continue to drive U.S. innovation into economic and societal success.
If the U.S. can empower its biotechnology industry in this way, it will certainly benefit the economy as a whole. At a time when relations with trade partners such as Russia and China are heavily compromised, focusing on spurring domestic manufacturing is prudent. InvestorPlace Senior Investment Analyst Luke Lango recently named the sector as one that investors should be watching. As he noted, “If the current trend persists, biotech stocks could soar another 55% into the end of the year.” Now with Biden’s new initiative on the table, investors have even more reason to be bullish on the sector.
Many biotech stocks have responded favorably to today’s news. The SPDR S&P Biotech ETF (NYSEARCA:XBI), a good indicator of the overall sector’s strength, has been rising steadily today. We’ve also seen growth from Biogen (NASDAQ:BIIB), Vertex Pharmaceuticals (NASDAQ:VRTX) and Axsome Therapeutics (NASDAQ:AXSM). These are all names to watch as the White House moves forward with its plan to help biotech production soar.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
