What does Biotech Index mean?
What you may think it means:
When you just come across ” Biotech Index ” you might be thinking, well hey – this sounds like a cool term. Does this refer to how much biotechnology products are in use in that area? How much of the food there is genetically modified and how much is not, something of that sort? (because in one of our articles we talked about Genetic Testing becoming a norm) Or like a measure of how invasive biotech is into that sector in the economy?
Turns out it’s a popular and brandable term for something very systematic and boring.
What it really means:
In NASDAQ, there is a listing called Biotech Index. It’s a stock market index, made up of securities of NASDAQ-listed companies classified (according to the industry classification benchmark) as either biotech or pharmaceuticals.
You can check the biotech index here at: NASDAQ GLOBAL INDEX
In order to remain included within the index, the components must meet the following criteria: (Source: Wikipedia)
- The security U.S. listing must be exclusively on the NASDAQ National Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing).
- The issuer of the security must be classified according to the Industry Classification Benchmark as either Biotechnology or Pharmaceuticals.
- The security may not be issued by an issuer currently in bankruptcy proceedings.
- The security must have a market capitalization of at least $200 million.
- The security must have an average daily trading volume of at least 100,000 shares.
- The issuer of the security may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being Index.
- The issuer of the security may not have annual financial statements with an audit opinion that is currently withdrawn.
- The issuer of the security must have “seasoned” on NASDAQ or another recognized market for at least 6 months; in the case of spin-offs, the operating history of the spin-off will be considered.