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As drug providers shift away from blockbuster drugs, the biotechnology sector, along with related exchange traded funds, will be supported by the next wave of specialized or targeted drugs.

For instance, Amgen (NasdaqGS: AMGN) this week announced a deal to acquire genetic sequencing firm Decode for $415 million to work on gene variants and common diseases, reports Ben Hirschler for Reuters .

Decodes expertise will help Amgens experimental medicines to target the right areas in the human body. [Biotech ETFs Outperform]

This fits perfectly with our objective to pursue rapid development of relevant molecules that reach the right disease targets, while avoiding investments in programs based on less well-validated targets, Amgen Chief Executive Robert Bradway said in the article.

The biotechnology industry has been moving toward developing personalized medicines that are better suited for a particular genetic profile.

Biotech ETFs are among the best-performing sector funds this year with some gaining more than 50%.

Looking ahead, President Obamas health-care reform will help cover more people, which would boost demand and the drug industry.

In our view, the biotech industry is much less susceptible to government intervention than are other health-care subsectors such as hospital operators or MCOs, according to Morningstar analyst Robert Goldsborough. And we think an ETF is the appropriate tool for investing in this notoriously volatile subsector.

Instead of picking individual risky stocks, ETFs provide a diversified exposure to the whole sector. Some biotech ETFs include:

• Market Vectors Biotech ETF (NYSEArca: BBH ). AMGN is 17.1%
• iShares Nasdaq Biotechnology ETF (NYSEArca: IBB ). AMGN is 8.4%
• First Trust Amex Biotech Index Fund (NYSEArca: FBT ). AMGN is 5.4%

For more information on the biotech sector, visit our biotechnology category .

Max Chen contributed to this article .

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.