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Biotechnology stocks have been some of the market's best performers, and that may have gotten you interested in adding biotech stocks to your portfolio. However, not all stocks in this industry are created equal. In fact, far from it.

The biotech industry is filled with unprofitable companies working on medicines likely to end up in the waste bin instead of on pharmacy shelves. For that reason, investors should approach this industry cautiously, and that means focusing on quality companies and limiting risk tied to upstarts.

The problem with this strategy, though, is identifying the good biotech stocks in a sea of not-so-good biotech stocks. With that in mind, here are two quality biotech stocks I think deserve to be the cornerstones of biotechnology portfolios, and three upstarts that could be worth tucking away, too.

Top of the class
Out of the handful of top-shelf biotech stocks, it's hard to argue that Gilead Sciences Inc. (NASDAQ:GILD) and Celgene Corporation (NASDAQ:CELG) aren't the cream of the crop.

Both of these companies already rack up billions of dollars in sales annually thanks to top-selling drugs, and each is reinvesting big money into next-generation medicines that could revolutionize patient treatment in key markets.

Gilead Sciences is the long-standing leader in the treatment of HIV and, more recently, the dominant player in the treatment of hepatitis C.

Last year, Gilead Sciences' HIV drug franchise hauled in more than $10 billion in revenue, and this year, Gilead Sciences should have at least five HIV therapies achieve billion-dollar blockbuster status.

Additionally, Gilead Sciences' hepatitis C drugs Sovaldi and Harvoni combined to generate sales of more than $12 billion last year, and despite growing competition, sales momentum for those two drugs continued in the first quarter, with the two posting combined sales of $4.4 billion.

Gilead Sciences' success has led to a swelling of its cash and that's led to the company paying its first-ever dividend to investors, but it's also fueling investment in next-generation HIV and hepatitis C drugs that could allow it to keep its market-leading position in the future.

Like Gilead Sciences, Celgene also sells leading therapies that dominate its target markets.

For example, Celgene's Revlimid is the top-selling multiple myeloma drug used in second-line treatment, and its drug Pomalyst is a fast-growing third-line therapy in that same indication.

Last year, Revlimid sales nearly surpassed $5 billion, and Pomalyst, which hit the market in 2013, is on pace to deliver sales of roughly $800 million this year. On their own, these two drugs would make Celgene worth owning, but Celgene also markets the blockbuster cancer drug Abraxane and the quick-growing psoriasis drug Otezla.

Overall, Celgene expects its product line-up will deliver total sales of at least $9 billion this year, up from $7.67 billion a year ago. That's impressive, but more impressive is Celgene's long-term forecast. The company believes its sales will total more than $20 billion by 2020.

If Celgene can deliver on that forecast, then it should have plenty of profit-friendly cash flow it can use to advance its next-generation cancer drugs through clinical trials, as well as expand into new markets, such as Crohn's disease.

Source: Gphrma.

Sprinkling the infield
Gilead Sciences and Celgene have the chops to make them worthy of being core holdings in biotech investor portfolios, but risk-tolerant investors may also want to consider owning some clinical stage biotechnology stocks, too.

Among next-generation upstarts, some of my favorites include Opko Health (NASDAQ:OPK), Portola Pharmaceuticals (NASDAQ:PTLA), and Amicus Therapeutics (NASDAQ:FOLD). Each has irons in the fire nearing commercialization, and each targets attractive markets that could prove to be very profitable.

Opko Health is run by billionaire biotech entrepreneur Phillip Frost, the person behind IVAX Pharmaceuticals, a generic drug maker that was sold to Teva Pharmaceuticals for $7 billion. Frost went on to serve as CEO of Teva Pharmaceuticals before leaving in February to focus on Opko Health full time.

Opko Health has already launched a new prostate cancer screening test it hopes will become the de facto diagnostic test used in doctor's offices, but it could have even bigger opportunities in treating chemotherapy symptoms, vitamin D deficiency, and human growth hormone deficiency.

In September, the FDA is expected to make a decision on Rolapitant for chemo-induced nausea and vomiting, and if approved, Opko Health could begin receiving royalties on Rolapitant sales by year end.

The FDA could also approve of Opko's vitamin D drug, Rayaldee, in 2016, and since Pfizer handed over $295 million up front plus additional potential milestone payments to acquire the rights to Opko Health's growth hormone drug, hGH-CTP, in January, that drug could end up being a big winner for Opko Health, too.

Portola Pharmaceuticals is less diversified than Opko Health, but it could also end up with a couple of top-selling drugs.

Portola Pharmaceuticals is developing an anticoagulant reversal agent for a new class of blood thinner known as Factor Xa inhibitors. Those factor Xa inhibitors are quickly displacing warfarin's decades-long stranglehold on the anticoagulant market, and if the FDA grants Portola Pharmaceuticals the go-ahead, then its andexanet alfa could become a staple at hospitals and urgent care centers, as there are currently no other options to reverse the blood thinning effects of Factor Xa inhibitors in emergency bleeding situations. While there's no guarantee of an FDA approval, Portola Pharmaceuticals has reported positive late-stage trial results that are encouraging.

Additionally, Portola Pharmaceuticals could end up competing in the factor Xa market with its own inhibitor, betrixaban. Betrixaban is currently in phase 3 trials, and results from that study are expected next year.

Finally, investors willing to take on a bit more risk might want to consider rare disease biotech company Amicus Therapeutics.

Amicus Therapeutics has filed for European approval for its Fabry disease drug migalastat. Migalastat works differently than currently approved enzyme replacement therapies, including Replagal and Fabrazyme -- two drugs with combined annual sales of nearly $1 billion.

Migalastat could help roughly 50% of all Fabry disease patients who still produce at least some of the critical enzyme necessary to prevent this tough-to-treat disease, and its different mechanism of action means it has potential as both a monotherapy and as part of a combination therapy.

It remains to be seen if migalastat can win over regulators, but given that Replagal and Fabrazyme are two of the world's priciest medicines, investors may decide that Amicus Therapeutics is worth more than its current $1.3 billion market cap -- if migalastat wins approval.

Tying it together
Biotech is prone to jaw-dropping pops and drops that can make these companies too risky for many investors, but for investors with a penchant for growth, a biotech portfolio that includes leaders Gilead Sciences and Celgene Corporation makes a lot of sense.

In addition to owning Gilead Sciences and Celgene, investors willing to take on more risk can consider sprinkling money among promising clinical-stage companies like Opko Health, Portola Pharmaceuticals, and Amicus Therapeutics. However, the hit-and-miss nature of small-cap biotech stocks means one or more of these bets could fail to pay off, so investors should still approach them carefully. 

Todd Campbell owns shares of Celgene, Amicus Therapeutics, Gilead Sciences, and Portola. Todd owns the equity research firm E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Celgene and Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days.

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