Let me start out by acknowledging that predicting the stocks in any industry that will deliver the best performance over the next decade is a crapshoot. You can take whatever odds there are against successfully doing so and probably double or triple them when it comes to picking the biotech stocks that will deliver the highest returns.
There are simply too many variables at play in the biotech world. Clinical trials can flop. The prospects for regulatory approvals can evaporate into thin air. Rivals can launch better drugs.
But there are factors we can look at that help improve the chances of choosing biotech stocks that are likely to succeed over the next 10 years. We can look at the company's lead pipeline candidates as well as earlier-stage long-shot candidates. We can look at the market potential for the indications those pipeline drugs target. And we can evaluate the risks the companies face.