Biotech stocks surge post-GFC

By Tim Dean
Thursday, 22 October, 2009

The Australian life sciences sector, particularly the ex-majors (all but the Big Three: CSL, Cochlear and ResMed), continue to show strong growth with no signs of slowing, according to the latest PricewaterhouseCoopers BioForum report, which will be released in November.

“The Life Sciences ex-majors have shown strong growth across the past three quarters. Emerging from the historical lows of 2008, they have now produced annual growth of 40 per cent,” said Craig Lawn, Life Sciences partner, PricewaterhouseCoopers. “The ex-majors are driving the growth in the sector and making up lost ground.”

The life sciences industry was hit particularly hard during the global financial crisis due to the high perceived risk in the sector. Many investors left the sector, but there's evidence the money is starting to return (see cover feature, September/October 2009 issue of Australian Life Scientist).

“A major difference from this time last year is that there has been a reversal of the driving force behind the Index with the ex-majors now leading the charge in comparison to the majors previous dominance through CSL,” says Mr Lawn. “This is an encouraging sign for the sector because a perceived value is there.”

The life sciences index was up eight per cent for the quarter, weighed down by CSL's failed takeover bid for Talecris and the exposure of the Big Three to currency fluctuations, particularly the strengthening of the Australian dollar.

However, the ex-majors have seen 31.2 per cent growth in the last quarter, outperforming both the All Ordinaries and the NASDAQ Biotech Index.

"The sustained positive performance of the Life Sciences ex-majors shows a sense of momentum is building so we are now not looking at purely a rebound scenario. The sector is building up a head of steam indicating that positive headway is being made which is unlikely to dissipate in the future,” says Mr Lawn.

For in-depth coverage of the life sciences sector post-GFC, see the cover feature of the September/October 2009 issue of Australian Life Scientist.