The biotech optimists win: Informal poll highlights belief in a rebound

Even after biotech endured a bearish downturn on Wall Street, optimism runs deep in the drug development field with a widespread belief that the good times aren't over.

There was considerable market angst following Hillary Clinton's tweet regarding drug pricing. So we decided to ask readers in an informal poll just what they were thinking. We put a simple question to them. After a three-year bull market, was the historic run over (was that the sound of a bubble bursting?) or would the industry rebound, with a continued inflow of blockbuster capital from IPOs and follow-ons.

At the time we threw the poll together, I figured we'd get a few hundred responses. In fact, we heard from 1,148 readers. And out of that pool, 868 of you--a whopping 75.6%--felt assured that a rebound is on the way.

Frankly, it came as more than a bit of a surprise. When we mounted an informal poll 7 months ago on whether we were in a sustainable bull market or a bubble, slightly more than half replied bubble.

So what were the reasons for this great confidence in a rebound now?

The comments followed a few deep grooves in popular opinion. They can be summarized as follows:

  • Big Pharma still needs biotech innovation as much, or more, than ever.

  • Lawmakers are a disagreeable lot, and talk about controlling drug prices is likely to remain just that: talk.

  • The froth has been extracted from share prices, and maybe that's not such a bad thing.

  • The demographics are in the industry's favor, with an aging population in need of multiple remedies.

My favorite, and the one I still tend to lean on personally, is that we're in an era of real scientific advances. Biotechs are shooting for big science, looking for breakthroughs in medicine that will fundamentally alter the landscape in the way diseases are managed. Yes, some companies will blow up when the technology fails, but the overall trend leaves biotech positioned to cultivate real innovation. And investors will still want a piece of that, especially as long as safe investments have near-zero returns. Also, with valuations down again, you may see some of the companies sitting out of the deal game jump back in again.

"A few bad apples tarnished the sector," says one. "An unfortunate speed bump. Biotech is a necessary component to drug development through their specialized research."

"Strong companies will rebound," says another. "Weak ones who shouldn't have gone public will not."

The industry also isn't running very scared about new laws. "As long as the GOP controls Congress," says one reader, "drug prices will not be regulated."

I cited these numbers in FierceBiotech's half-day London summit and I'll be back in front of an audience this afternoon discussing the same basic trends at the BIO Investor Forum in San Francisco. There's a reception following the panel discussion, and I hope to see you there. It appears that I'll be mixing with a group of optimists. -- John Carroll, editor-in-chief (email | Twitter)

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