The market capitalisation of the biotechnology industry rose 156 per cent from $137 billion in the year 1999 to $331 billion in 2001, partly, according to the US’ Strategic Research Institute, due to the product stream from biotech companies making them look more like a traditional pharmaceutical investment proposition.
Investors now see biotech as a ‘solid long-term investment opportunity’. To help them capitalise on the more viable companies, SRI is holding its fourth BioFinancing Conference in Boston on May 16 and 17, 2002.
But it is not all roses as lead industry newsletter BioCentury pointed out last week. The cost of pharmaceutical R&D is soaring and yet the volume of new products emerging from this spend is static.
While the human genome still holds out a treasure trove of new drug prospects, the question is, can the biotech boutiques come up with the goods for the pharma industry before it runs out of all its blockbuster patents?
Over in the UK, the investment story is still a puzzle. The Financial Times stated on 16 March, that in the last twelve months the UK’s eight healthcare unit trusts had on average dropped 12.9 per cent in value. The optimists for the industry like to quote the demographics argument that the aging population is living longer and spending more on medicines, so all must come good in the end. The FT quotes the fact that 3.5 per cent of Germany’s population is over 80 and accounts for a massive 28.5 per cent of healthcare spending.
So why does this not translate into healthy investment funds? Last year there was a retreat from growth stocks like biotech back into old economy stocks. Also, these healthcare funds are by no means just in biotech. Now, some of the fund managers are re-thinking their portfolios and tipping out the large cap pharmas and going for the higher margin industries that service healthcare such as contract research labs and private hospitals and also medical devices, as well as keeping a good percentage in growth biotech stocks.
Funds are usually seen as a safer way into a risk sector like biotech and also aan easier entree to overseas markets, but you can of course pick your own stocks.
Advice is at hand for the European investor from Sachs Associates and Bloomberg with their ‘Global Biotech For European Investors’ coming up in London on 16 April 2002.
www.srinstitute.com/cx406
www.sachsforum.com

Comments
Post new comment