UK AND EUROPEAN BIOTECHS. Message Board

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Biotech / Medical : UK AND EUROPEAN BIOTECHS.

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To: Mr Logic who wrote (52)	3/11/1997 9:20:00 AM
From: James Reynolds	of 64

Patrick, I think there is money to be made in both the UK and US biotech sectors. Investing in either sector has its advantages and disadvantages and as long as you are aware of these you can make money. Obviously the UK biotech sector is less mature and diverse than the US sector. Consequently, there are fewer companies to choose from and valuations have tended to become a little stretched at times relative to US valuations. However, the quality of company listing on the UK market has tended to be high - as a result there are very few dogs. Fewer companies also means greater analyst coverage per company and it is easier to get your story heard. By contrast the US biotech has hundreds of companies to choose from which means that a lot of companies are competing for a slice of the investors pie. Inevitably this means that some US biotechs are overlooked and thus hugely undervalued. It seems to me that in the US if you don't have a heavyweight broker and PR to help tell your story you simply don't gain the necessary exposure and your shares languish. If you are patient and prepared to hold these types of stocks until such time as the market realises their underlying potential then there are some tremendous buys in the US biotech sector, but there are also a number of dogs too. The UK biotech sector is beginning to mature and the number of companies coming to the market is steadily increasingly - so investors can be more selective than say a couple of years ago. US analysts have been critical of UK biotech valuations but I think the real test for the UK market will be over the next couple of years when a number of UK biotechs are hoping to gain approval to launch new products - for example British Biotech, Chiroscience, Celltech, Cortecs, Scotia and Standford Rook all hope to have major products approved. I think there are quality companies on both sides of the Atlantic and I am hoping that biotech stocks generally will perform well over the next 5 years as the number of new product approvals continues to grow each year.

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