Scott, well said. There were great bio bargains throughout the '70s, '80s and '90s. Most performed like dogs. There will be great bargains throughout the first half of the 21st century in the same way -- non-performers all, with nothing but a great story to tell, hefty resumes in the lab, and a bunch of over-paid execs with a lot of visa stamps on their passports.
I came to the opinion last year that bios as a sector are not likely to perform well for any great, long period of time for the reasons you hint: they don't make money, most don't even have products, they are very heavily regulated, and because of medical and research ethics everybody is kept blind to R&D progress until it's announced to the world good or bad. Insiders and a handful of brokers with great access to information have the jump on the rest of us; otherwise, it's like playing roulette blindfolded. Only a handful of solid names consistently do well -- AMGN the star among them -- but for the rest I try to wait on FDA news or the next best thing to it.
No one and certainly not Congress will get the FDA to reform, speed up, or loosen its grip on drug trials. Ten years or more and millions of dollars to bring a single drug to market simply is too long, too much, and with too much uncertainty.
The only thing that can sustain the industry as a whole, except for short term aberrations like Nov-Feb, are prolonged waves of consolidation through M&A. Most of these buggers are too proud of their independence, of course, but it will happen. The vast majority just aren't good enough to make it on their own. |
