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Biotech / Medical : VD's Model Portfolio & Discussion Thread

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To: Boyce Burge who wrote (1094)	6/11/1997 12:17:00 AM
From: Vector1	of 9719

Boyce, I think that investing in big pharma is an excelent and less risky way to play the aging of the population and the coming of the biotech revolution. In fact I have invested a substantial portion of my wifes pension money in PFE which is my favorite big pharma. Big pharma is however much closer to an efficient market. The companies are very actively followed and the good ones are trading at a healthy premium to their estimated 5 year CAGRs. There was an interesting article in Fortune a couple of months ago, in fact the URL was posted on this thread, which made the point that MRK has a higher total cap than all the public biotechs combined notwithstanding that the biotechs will be spending many multiples of MRK in R&D. I believe that in 10 years the market cap of the public biotechs will be many multiples of MRK. Not because MRK is going to take a dive but because these smaller biotechs will be on the forefront of changing the human condition. I also believe however that a relatively small percentage of these biotechs will make up the vast preponderence of the value. The key is picking enough of the right ones. These companies will reward investors with returns that are calculated in multiples of invested capital rather than IRR. I guess with some help from my friends on this thread, my ability to analyze companies, access to info through the internet and access to others in the scientific community I think I have a good chance of picking some of the right companies and thereby outperforming the market. Its also facinating and a hell of a lot of fun. By the way as you look at our porfolio and follow the discussion you will see ther are a number of platform companies in the portfolio that have the opportunity to dominate and define their sectors. AFFX and INCY are clearly examples but companies with equal long term potential inlude LGND, GZTC and ISIP. Finally while big pharma will benefit from its biotech collaberations remember its not easy to make a material impact on a 50 billion dollar plus company. Sorry for the typos its late and I am tired. V1

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