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Biotech / Medical : Biotech Valuation
CRSP 55.08-2.9%Dec 26 9:30 AM EST
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To: Arthur Radley who wrote (14811)12/20/2004 10:07:12 AM
From: Biomaven  Read Replies (3) of 52153
 
Time to take a step back and try to figure out the big-picture consequnces of the cox-2 issues form an investment perspective (aside from their immediate impact on MRK and PFE of course).

The immediate consequence is we are going to see a more cautious FDA in terms of drug approval. That's going to hit most for any chronic-use drug for a non-life-threatening condition. That means longer and bigger trials.

We are also going to see much tougher post-approval monitoring. I think that's a good thing. Before that kicks in, I think we are going to see companies think twice about conducting new Phase IV trials that might turn up something unpleasant.

Overall the risk/rewards of drug development just got worse. Tougher to get drugs approved, and apparently more risk once they are approved (really that latter risk was always there, but now it is out in the open more). So pharma are definitely in for a tough decade. The political climate just got a bit worse, and still no permanent leader at the FDA. Writing long-term calls on the DRG index may be a pretty good strategy.

From biotech's perspective it is a little more of a mixed bag. More drugs for cancer and the like where the risk calculus is a better, and also more desperate pharma in terms of need to fill pipelines. But overall I have to say it is a negative.

Peter
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