Whether you've decided to take notice, the biotechnology sector is rapidly evolving from the roll-of-the-dice gamble that it was in the early 2000s to an investor's paradise. Better venture capital funding, vast improvements in clinical testing and drug development technologies, faster FDA approvals, and considerable amounts of cross-corporate collaboration have made the biotech sector a stomping ground for investor dollars.

However, take note that I didn’t say "trader's dollars" -- because there are numerous ways you can minimize your risk by investing in the biotech sector without sacrificing long-term gains. Here are three primary ways to reap the rewards of biotech without assuming the all-or-nothing misses often wrongly associated with the sector.

1. Target established biotechnology companies.
This one probably goes without saying, but by purchasing established biotechnology companies with actively growing pipelines, you tend to eliminate a lot of the downside risks associated with one-hit wonders.

Affymax (AFFY -12.50%) is the perfect example of why biotech investors want to do their homework before investing. Even before its anemia drug Omontys was voluntarily recalled because of a number of deaths and hypersensitivity issues associated with the drug, it should have raised red flags to shareholders. Omontys was Affymax's only approved drug, and it was being utilized as a combination therapy in its only other two clinical trials. Essentially, it was Omontys or nothing for Affymax -- and in turn since the recall, its share price has gone from more than $20 to practically nothing!

Instead, I would encourage prospective long-term investors to turn to biotech companies with plenty of established drugs already on the market that also have numerous blockbusters plainly visible in their pipeline. I believe both Celgene (CELG) and Gilead Sciences (GILD 0.51%) perfectly fit this bill.

Celgene's superstar has been cancer drug Abraxane -- which was first approved to treat metastatic breast cancer in 2005, but has been piling up additional indications and positive test results rapidly as of late. Abraxane added the indication of advanced non-small-cell lung cancer treatment in October, and, just a month later, Celgene noted that Abraxane when combined with Eli Lilly’s Gemzar helped improve survival rates in patients with pancreatic cancer. On top of this, Celgene announced in January the possibility that it could double revenue and triple profits, organically, by 2017! Considering a multitude of possible new indications for Abraxane, the approval of Pomalyst for advanced multiple myeloma, and the potential for Apremilast to be approved for treating psoriasis, Celgene's future as a long-term investment looks bright.

The same can be said for Gilead Sciences -- which has a wide-reaching portfolio of products targeting cardiovascular and liver diseases, but headed most prominently by its established HIV/AIDS drug program. The scary thing is that Gilead’s pipeline could be the most robust of any biotech company. Stribild, the company’s new entirely in-house all-in-one HIV medication, was approved in August and will soon replace Atripla. Also, Sofosbuvir, the company's experimental oral hepatitis-C medication, has surpassed all expectations in all four late-stage trials. Gilead is well on its way to multiple blockbusters.

2. Seek out well-diversified pipelines.
Despite popular belief, you can have success by investing for the long term in completely clinical-stage companies, or companies with few approved drugs, if you stick to one simple rule: Buy into diverse pipelines. This means avoiding the one-trick wonders that have just one or two drugs in their pipeline and focusing on biotech companies that have a rich pipeline among a myriad of disease fields. Two companies that come to mind that would present a good example of this are Isis Pharmaceuticals (IONS 0.49%) and ImmunoGen (IMGN).

Isis Pharmaceuticals does have one FDA-approved drug on the market in Kynamro, which was approved in January to treat homozygous familiar hypercholesterolemia. Beyond that, however, it's a veritable sea of possibility with three ongoing phase 3 trials, 15 ongoing phase 2 trials, five ongoing phase 1 trials, and an additional eight compounds in preclinical trials. Even if the success rate is low, having 31 existing clinical and preclinical stage trials across multiple indications -- including cardiovascular, metabolic, cancer, rare diseases, and inflammation -- gives Isis a tremendous chance at being successful and gives long-term shareholders plenty of promise that the stock will head higher.

ImmunoGen is a prime example of another budding pipeline. ImmunoGen's targeted antibody payload, or TAP, technology delivers potent chemotherapy agents directly to cancer cells with minimal healthy cell death. In February, Kadcyla, the HER2-positive breast cancer drug developed by Roche and ImmunoGen, was approved by the FDA and could open the door to multiple other combination therapies for ImmunoGen's TAP technology. ImmunoGen has one compound currently in late-stage trials, eight separate ongoing mid-stage trials, and nine early-stage trials. This gives ImmunoGen 18 additional chances to combine its technology with compounds from various other pharmaceutical and biotechnology companies. Those are odds that will work in your favor over the long run.

3. Buy a basket of biotech stocks.
If you're still too leery to invest in individual biotech companies, a smart move would be to buy a basket ETF that effectively allows someone else to do the work for you. Within the biotech sector, you have quite two very good choices.

The most obvious selection is the SPDR S&P Biotech ETF, which has returned an average of 9.7% annually since inception in 2006 and has a nominal gross expense ratio of 0.35%. The fund's top holdings include NPS Pharmaceuticals, which just repurchased the global rights to its short bowel syndrome drug, Gattex, earlier this week; and Sarepta Therapeutics, which is quickly advancing its Duchenne muscular dystrophy drug, Eteplirsen, toward what I'd figure would be an FDA accelerated approval. 

The other consideration here is the Market Vectors Biotech ETF. This fund has a net expense ratio of 0.35% and has returned 55% to shareholders in just the 15 months since it debuted. Unlike the SPDR S&P Biotech ETF where no stock comprises more than 2.8% of the total value, the Market Vectors Biotech ETF is considerably more focused on fewer companies. Amgen, Gilead, and Celgene comprise 33.8% of the fund by themselves! There's a definite focus on more established companies with this fund, but you'll give up a bit of the diversification you can get with the SPDR S&P Biotech ETF. 

You, too, can invest in biotech
I hope this has inconclusively shown you that you can successfully invest in the biotech sector for the long run instead of carefully waltzing around the sector as if it were the roulette table at the casino. Focusing on established names, digging into well-diversified pipelines, and, if all else fails, buying a basket of biotech companies, could be your way of claiming your piece of the profitable biotech pie.