Liquidity is definitely amping things up in biotech, but industry trends and scientific advances are playing equal if not larger roles. The NASDAQ biotech inde

Liquidity is definitely amping things up in biotech, but industry trends and scientific advances are playing equal if not larger roles. The NASDAQ biotech index starting outpacing the more tech-focused NASDAQ and the S&P around 2012. Biotech's outperformance peaked in 2015 and has been growing roughly at the rate of the NASDAQ since. The growth around 2012 was driven by better than expected sales from a number of big biotech companies like REGN, CELG, GILD, AMGN, BIIB that drove their stocks way up. Then from 2012-2015 biotech benefited from a ton of pharma M&A. 2012 was the "patent cliff" where a ton of blockbuster drugs went off patent. Some very big companies lost 30%+ of their sales. 2012 was the first year ever that the pharma industry's sales shrank. At the same time, R&D productivity in big pharma was declining and they were laying off tons of R&D staff, so they had no new drugs to replace the off-patent ones. So they started buying tons of startups, and paying high prices M&A activity dropped after 2015, and the sector's growth has been more limited since. There also seem to be fundamental advances in science that are decreasing the cost and risk of drug development. Some studies suggest that the probability of approval is actually increasing in recent years. Some of this is because FDA is becoming more supportive of innovation, some is because of advances in precision medicine, biology, biochemistry, etc Interestingly very little of the current biotech boom has to do with AI/ML / novel "tech". There are certainly advances in computation, biostatistics etc that have enabled companies to develop drugs more efficiently, but these have mostly come from within industry or academia, rather than from tech startups. There are some really interesting tech startups working in bio that could drive a new wave of innovation, but that would be on top of the innovation coming from biologists, biochemists, biostatisticians etc