I have one (maybe two or three) simple questions to all *biofreaks*:
1. Where is confidence, and why strong conservative sentiment for recent rally?
2. Why many compare bios rally with high technology (micro-electronic and internet) past performance?
3. Are momentum player for sure significant contributory factor here?
I will tried to give some light on question #2.
While, internet, telecommunication, and related stocks do show similar pattern in stock price rise (explosive growth), this two technology are fundamentally different.
First; bio-pharmaceutical like many new drugs needs time to evolve from initial scientific discovery to applicable technology and new drugs. And when does evolve, bio-technology is protected from competition by patents as well as *inside* know-how. Generally this wasn't case for *consumer* high-technology. Few top people can just walk from one company to another and build *value*.
Second; profit margin fro bio-drug is in +80% range, while for *consumer* field is ???, but <40%.
Third; aging population, "modern" life-stile, world-wide growth of the developing nation,..will generate at least equal if not higher rate growth of needs for new bio-drugs than for new *consumers* high technology products. Keep in mind that today high-technology nations did pay price in *health* of its population.
Point is that, regardless of the disproportion in stock price rise for sub-sectors stocks, sector as a whole has a long way to go, just IMO.
Miljenko.optimist |
