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Biotech / Medical : Biotech Valuation

CRSP 56.87

-2.3%

Dec 5 9:30 AM EST

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To: Sam Citron who wrote (7511)	12/15/2002 8:36:35 PM
From: Harold Engstrom	of 52153

1. They are more volatile but that doesn't mean they should be discounted. 2. All businesses that are worth investing in typically have their returns in the future. 3. This cuts both ways and currently I would bet that the worm is set to turn again as the FDA gets a head. Biopharmaceuticals have the potential to generate enormous revenues with high growth rates. And, their promise unfolds over long periods of time, enabling knowledgable, patient investors (including amateurs) the ability to profit. Sugar water companies like Coke and razor blades and battery companies like Gillette will not give you a great idea of what is coming in 4 years. They entail less risk, but also will provide less reward. A Rick Harmon or Biomaven or Miljenko can often detect opportunity, take time to analyze it, and have time to capitalize on it to an extent that I have not seen present in other industries. Why would you pay a greater multiple for Coke than Pfizer or Amgen? What is the barrier to entry for soda pop or razor blades? What other industry other than bio/pharma gives you a 7-10 year window into oncoming competition where the professional money is guaranteed not to act until the last minute?

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