In the recent Pharma & Biotech half-year review 2014, consolidated by Evaluate Pte Ltd and EP Vantage, editors had sum up the sector industry as “volatile”.
Make no mistake
There are gains to be made by investing in drug developers, helped along by an M&A frenzy that saw nearly $90 billion of equity swallowed up in the first half of the year. However, the key indicator of interest, Nasdaq’s biotechnology index, topped out in February as the generalist investors who piled in during 2012 grew nervous about the sustainability of drug pricing. And then a summer bounce back was cut short by growing US ire over the M&A-aided migration of companies to overseas domiciles to cut their tax bills.
Long term strategies reward handsomely
The pace of IPOs slowed over the first half, a sign that an exuberant market might have begun to sober up. This is, of course, the pessimist’s view. The optimist can look at companies like Actelion and InterMune, both of which have flourished in this uncertain market by executing flawlessly on their long-term strategies and were rewarded handsomely by investors. For every deflating bubble like Pharmacyclics’ performance in the first half, there seemed to be another implausible success story like Intercept Pharmaceuticals. And, no matter how many doubters were willing to call the top of the market in February, there is one fact that cannot be denied: at the time of writing the Nasdaq index stands at more than two and a half times its previous peak in 2000.
The above short review of Pharma and Biotech sector is from Pharma & Biotech half-year review 2014. Download the full review here. Visit our website or contact us to find out more about our 3 Day MBA in Pharmaceuticals.