Analysts: Big Biotech will grow despite economy

Although they've fallen from the record highs posted in August, biotech stocks aren't as risky as many fear--or expensive, says a report by Barron's. Not surprisingly, Big biotech is doing better on Wall Street than their smaller counterparts [1], but they're also doing better than the broader stock market [2] and will continue to grow. Barron's report has a number of analysts touting Big Biotech's resilience: "The biggest companies will grow profits irrespective of what happens in the economy," says Evan McCulloch, manager of the Franklin Biotechnology Discovery Fund. "At a time when growth rates elsewhere are decelerating or turning negative, there is a sense of certainty with these companies."

Another analyst with Standard & Poor's Equity Research says Big Biotech stocks could climb as much as 15 to 20 percent annually for the next three to five years. Will Muggia, chief investment officer at Westfield Capital Management, concurs: "(Big Biotech) are some of the only companies right now that I am confident will grow earnings year over year."

Recognizing this, pharma has been eyeing biotechs with promising pipelines. Roche continues to court Genentech, while Eli Lilly managed to snatch up ImClone right from under Bristol-Myers Squibb.

Of course, there are some risks. Big Biotech has fared well despite rising unemployment rates and reports that patients are beginning to cut back on their meds. But worsening unemployment could eventually hurt even AIDS and cancer drugs, Barron's reports. And as Obama has made healthcare a top concern on his agenda, there may be new legislation for generics and pricing controls on the horizon. 

- read the Barron's article for more [3]

Related Articles:
Big Biotech's Stock Report [4]
Biotech stocks rule--sort of [5]
Big Biotech emerges as a shelter in economic storm [6]
Biotech fears looming pricing pressures [7]
Credit crisis pushes biotechs to the brink [8]
Economic crisis hammers small, mid-sized biotechs [1]