Thursday, February 12, 2009

Survey: Biotechnology Industry will Bounce Back

The biotechnology industry is expected to rebound and outperform healthcare industry and the rest of the market this year, according to findings from an investor perception study released by Thomson Reuters and the Biotechnology Industry Organization (BIO) at the 11th Annual BIO CEO & Investor Conference in New York.

  • Investors have stated that a company’s cash position is now more important.
  • More than two-thirds in the study expect greater M&A volume in 2009, with major pharmaceutical companies buying biotech of all sizes, and large biotechs buying smaller biotech companies.
  • The study found that most investors are neutral to positive about the policies likely to be pursued by the Obama administration.
  • Investors are particularly hoping for greater consistency and predictability from the FDA where higher safety barriers and insufficient resources are cited as primary reasons for limited drug approvals.
  • Most investors pay little attention to activism in the biotech sector
  • Meeting with management is the most important factor when researching investments, followed by conferences and sell-side research, which is still considered important.
Investors are optimistic about biotech stock performance
  • 70% expect biotech to outperform the rest of the market this year.
  • 59% consider biotech undervalued, while only 4% say the sector is overvalued.
  • 57% expect biotech to rebound during this year; another 30% expect a rebound in 2010.
Investors are less optimistic about research and development
  • 60% state overall productivity in 2009-2011 will be the same as in 2006-2008.
  • Investors see the best opportunities in mid-cap companies with late-stage pipelines
  • 37% of polled investors see opportunity in micro-and small-cap companies, but only 16% favor early stage pipelines over late stage pipelines.
  • 67% of investors state the best investment opportunities lie in oncology while 37% see promise in immunology.

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