Solid performance for biotech: PwC

The life sciences sector experienced a recovery in the third quarter of the 2009 financial year, according to the latest BioForum report from PricewaterhouseCoopers.

While the index fell 1.5 per cent, the overall All Ordinaries fell 3.5 per cent.

And it was the small cap stocks that did the job, with the index ex majors performing strongly, particularly in terms of secondary capital raisings.

The combination of Mesoblast, ChemGenex and Starpharma helped the index’s secondary raisings to total $39 million, a far cry from the $12 million raised in the previous quarter.

PwC points out that the US market also increased secondary capital raisings in the quarter, from $240 million in quarter two to $694 million this quarter.

PwC life sciences partner Craig Lawn said the performance could be seen as a rebound rather than a recovery, considering the plunge the stocks took in the last quarter.

“The annual performance, however, indicates that the ex-majors have performed better than the overall market over the longer term,” Lawn said in a commentary on the report.

“Biotechs have responded to the volatile time in the market by sticking to their strategy and not diverging from this course,” he said.

“Despite the strong current sector performance, nothing has changed other than providing some positive news and confidence for biotechs to focus on.”

He said there were several positive plays on the mergers and acquisitions front, particularly with interest from the US, but he expects to see more consolidation locally.

“The message for those in the biotech industry is that despite the strong results nothing has changed. Focus on the positives and the signs which give you confidence. The current quarter’s results shouldn’t change your fundamental strategy.”