A crash for the markets - a crash for biotechs ? Message Board

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Biotech / Medical : A crash for the markets - a crash for biotechs ?

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To: DR. Rainer Forst who wrote (39)	12/16/1996 3:07:00 AM
From: Spekulatius	of 74

OK-no more crash theories, here are some facts: Regarding the price/sales ratio, some biotechs are cheaper than the major drug companies. Examples are Genzyme and Chiron. Both are selling at 3x sales compared to 4-5x sales for Pfizer and Merck. So, because I think that both biotechs will show bigger growth than those majors (with 15-20% growth estimates for the next five years) both biotechs are much cheaper. The prices/sales ratio is a very defensive approach, I admitt because it does not value the product pipeline. But I think the product pipeline of both co. is quite reasonable. Both co. a covered against a crash, in some way: Genzyme has a very low price/book value ratio (2x) and a low P/E ratio (20x), while Chiron is owned 50% by Novartis (Ciba Geigy and Sandoz). Regards, Ralf

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