There has been a gradual decline in prices of numerous small and medium size biotech firms over the last several weeks on the premise that higher interest rates and inflation make these development stage firms, most of which pay no dividends and operate at a loss, less attractive. Larger firms, like AstraZeneca, which pay dividends, no matter whether they have large debts, have retained their share price, even if it is not going up much, if at all.
The main issues, as I see it, are (1) a very short term outlook on the part of large scale investors and traders, and (2) fear that proposed government regulations on pricing of certain high priced prescription drugs will reduce drug profits substantially.
There's no possibility of changing the minds of investors geared to short term profits, but the very existence of large numbers of investors with similar mindset has led to many smaller, development stage biotechs performing poorly. As for proposed government regulations (part of the Build Back better legislation going nowhere fast in Congress), every instance for more than 60 years, when drugs were made more available to the general public, drug company profits have gone up considerably. To lobby against government on the notion that its regulations will interfere with higher profits is nonsense.
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