Investors: biotech to rebound, outperform in '09

February 9, 2009 | By Calisha Myers

The biotech industry is not only expected to rebound this year, but according to investors, the sector will outperform healthcare and the rest of the market. So says a perception study of over 80 investors conducted during December and January by Thomson Reuters and BIO's Investor Relations team. Participants were asked to weigh in on current challenges, the biotech industry's relative valuation, and the outlook for 2009.

When it comes to stock performance, 57 percent of those polled expect biotech to rebound this year and 70 percent of participants expect biotech to outperform the rest of the market. A very small minority--4 percent--believes the sector is "overvalued" while a majority of 59 percent consider biotech "undervalued."

Over 80 percent of participants acknowledged that the effects of the credit crisis have changed investment approaches. In today's market, a company's cash position is much more important. Investors also said that meeting with management is the most important factor when researching investments, followed by conferences and sell-side research.

Of course, it will come as no surprise that two-thirds of investors said they also expect more M&A this year as Big pharma and Big Biotech buy up other biotechs. In addition, cutbacks due to the credit crunch will continue to impact R&D, according to investors. Over 60 percent of participants stated overall productivity will be stagnate, with 2009-2011 R&D no better than 2006-2008. A majority 67 percent of investors said the best opportunities lie in oncology, while 37 percent favored immunology pipelines.

As for the new administration? Participants had neutral to positive perceptions about policies likely to come out of Obama Administration. What investors are really hoping for is some change within the FDA, particularly policies which lead to greater consistency and predictability.

The full report is set to be released in March.

- check out the BIO/Reuters release