By Donald Zuhn --
Last week, the Biotechnology Industry Organization (BIO) and Thomson Reuters released the results of an investor perception study conducted earlier this year that correctly forecast a rebound for the biotech industry. A 37-page report outlining the result of the study can be obtained here. Patent Docs initially reported on this study back in February, before BIO and Thomson Reuters made the report available (see "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009").
In announcing the results of the study, which was conducted between December 1, 2008 and January 31, 2009, BIO noted that while survey participants accurately forecast the current rebound, they actually "underestimated the degree to which positive clinical trial data would drive the sector higher." John Craighead, Managing Director of Investor Relations and Business Development at BIO, said that while investors surveyed for the study "had forecasted a 15% rise for biotech stocks by mid-year," this prediction turned out to be "quite short of the impressive gains that we have seen in the last several weeks." Mr. Craighead also asserted that "to the extent . . . this rally has been driven by positive trial results, it is a better sign for the long-term vitality of the biotechnology industry than the other catalysts investors had cited, such as mergers and acquisitions or an improvement in general market sentiment."
In conudcting the study, Thomson Reuters interviewed 80 biotechnology analysts, investors, and portfolio managers representing firms with $2.3 trillion in assets under management, including $266 billion in healthcare and $76 billion in biotech. BIO stated that the study shows that investors remain bullish about biotechnology -- 64% of study participants stated that now (meaning the beginning of the year) is a "good" or "very good" time to invest in biotech, and 70% of participants expected biotech to outperform the rest of the market in 2009. In a year that has already seen a number of major biotech mergers and acquisitions, more than two-thirds of participants expected greater M&A activity in 2009, with major pharmaceutical companies buying biotech companies of all sizes and large biotech companies buying smaller biotech companies. Investors also saw the best opportunities coming from investments in smaller companies that are still in the early stages of R&D. The study also showed that market uncertainty has lowered investors' tolerance for risk.
For additional information regarding this and other related topics, please see:
• "Is Biotech/Pharma Beginning to Bounce Back?" August 12, 2009
• "Docs at BIO: Steve Burrill's State of the Biotechnology Industry Report 2009," May 19, 2009
• "Docs at BIO: Ernst & Young Hosts Super Session Addressing Financial Performance of Biotech Industry," May 19, 2009
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009
• "BIO Meets the Press," February 26, 2009
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009
• "NVCA Predicts Another Slow Year for Venture-backed Businesses in 2009," December 18, 2008
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