Aussie biotech holding its own: Intersuisse

The Australian biotechnology sector held its own through last year's tough market conditions, despite many companies recording a big drop in share price, according to a new report by stockbroking firm Intersuisse.

The report, released today, provides an analysis of the financial performance of the 59 companies on the Intersuisse Biotechnology Index, a group that includes devices and equipment companies as well as the more traditional drug discovery and development biotechnology companies.

While the performance of the index reached its all time high in February 2002, it slumped 34 per cent by mid-October, and has risen six per cent since then. But since 1999, the index has risen 152 per cent, compared with a rise of 11 per cent for the All Ordinaries Index and 25 per cent for the US Nasdaq Biotechnology Index.

The most profitable companies after the big three (CSL, ResMed and Cochlear) were the Institute of Drug Technology, Ellex Medical Lasers and Agenix, while the largest losses for the year were posted by Gradipore, Novogen and Ambri.

Only seven companies had increased share prices, including Occupational and Medical Innovations (518 per cent), Sirtex Medical (190 per cent), Chemeq (161 per cent), Prana Biotechnology, Benitec, Ventracor and Unitract.

According to Peter Russell, Intersuisse's manager of research, the biotech sector is becoming more focused on commercialisation, with companies looking at generating cash flow as early as possible.

"A lot of companies have bunkered down well in the tough environment, and generally there is still money for biotechnology, with more realistic expectations in the market and some good opportunities," he said.

Russell said the year ahead should be an interesting one, and a good year for biotechnology companies. But he noted that mergers and acquisitions were likely to occur, and warned that 2003 was likely to be another tough year for investment in general. "I would not expect much in share price increases," he said.

The Intersuisse report recommended five biotechnology companies for 2003 -- ResMed, Ventracor, PanBio, Institute of Drug Technology and Compumedics -- which Russell noted did not fit the typical drug discovery profile of most biotechnology companies, but were instead mostly device and diagnostic companies.

He said the recommendations were based on the five companies being particularly likely to produce profits and revenues in the near term at a level in line with their share prices.