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Biotech / Medical : Biotech Valuation

CRSP 51.11

-2.1%

3:59 PM EST

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To: Miljenko Zuanic who wrote (3275)	4/2/2001 12:54:57 AM
From: Spekulatius	Read Replies (2) of 52153

Miljenko, I do believe that your posts merits more thoughts. There are two recent developments, that will intensify the competition for biotechs: 1) Abundance of cash on hand for many biotechs (as you said) 2) Genomic discoveries & Tools and a flood of new drug targets While 1) has improved the power balance of biotechs versus drug companies in favor of the biotechs it also has intensified the competition among biotech peers. Also, the new genomic discoveries are expensive and complicated to exploit for smaller biotechs. I believe that these macrotrends will favor the bigger, cash rich biotechs : VRTX, MLNM, HGSI, ABGX, MEDX, PRCS which will streamline and industrialize their methods. I do think that the hurdle for newcomers to be successful will become higher and higher. Consolidation would be one way for the smaller biotechs to gain critical mass and to increase their chance of success. In the past, we have seen quite a few companies that were lucky and hit the jackpot - my guess is that we will see this less and less in the future.

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