from the FT search site at: globalarchive.ft.com
FT GUIDE TO THE WEEK: They're all into genes now: Robert Budden reports on the resurgence in biotechnology stocks
Financial Times ; 22-Jan-2000 12:00:00 am ; 401 words
The British biotechnology sector, which has been in the doldrums for much of the past three years, is enjoying a major resurgence. Indeed, shares in some biotechnology companies have quadrupled in value since December.
Excitement over developments in cracking the human genome, and disenchantment with pharmaceutical companies, has led to heavy buying of selected biotechnology stocks.
Leading the rise have been companies such as Celltech and Cambridge Antibody Technology. Both are working on technologies for developing antibodies outside the human body but giving them human characteristics in order to make them acceptable.
"We are seeing ever-increasing numbers of such antibodies which actually work coming out of the clinic, and the future pipeline is vast," according to Dr Andrew Clark, fund manager of the Finsbury Life Sciences investment trust.
Clark said the rises in British share prices are following a trend similar to that of the US where companies such as Genentech and Idec have recorded big increases in their market worth over the past six months. Both companies are
already generating significant sales from successfully cloned antibodies which have been accepted by humans.
The US biotechnology market has been racing ahead for almost a year. It is being driven by companies such as Human Genome Sciences, Incyte and Millennium, which are conducting research to crack the human genetic code.
"There is a mad dash to own some intellectual property in these genes," said Clark. "A lot of investors want to own the human genome." Since July last year, shares in some of these companies have more than quadrupled.
Antony Milford, manager of the Framlington Health fund, a unit trust which invests in biotechnology and healthcare companies, said investors had looked everywhere in their hunger for biotechnology stocks.
"A year ago, people said no one would look at a smaller (biotechnology)company again," he added. "But, in the US, there are virtually no stocks which have been overlooked."
Many institutional investors who had become disenchanted with growth prospects for the pharmaceutical sector have been selling holdings in these companies to buy biotechnology stocks.
"A lot of big drugs will come off patent in the next five years," he said. "Unless pharmaceutical companies can increase their productivity in research and development, the number of new drugs will not be enough to replace those
coming off patent."
Biotechnology company shares also are serving to satisfy the appetite of investors for growth companies. Clarke believes the latest rally in biotechnology stocks has a lot further to go.
However, he warned investors to be selective. "Specific sectors may already have reached the top. I think many genomics companies are already there.
But companies which are developing human antibodies have a lot further to go." |
