Investor Perception Study predicts biotech rebound.
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Press Release Summary:
According to investor perception study released by BIO and Thomson Reuters, investors accurately forecasted rebound of biotechnology industry, but underestimated degree to which positive clinical trial data would drive sector higher. Although study participants indicated "an increase in positive clinical news" as second likely catalyst for rebound, they softened that view with assertion that overall research and development productivity in 2009-2011 would be the same as 2006-2008.
Original Press Release:
BIO/Thomson Reuters Investor Perception Study: Biotechnology Industry is Expected to Rebound
New York, NY (Wednesday, August 12, 2009) - Investors accurately forecasted the rebound of the biotechnology industry, but underestimated the degree to which positive clinical trial data would drive the sector higher, according to findings from an investor perception study released today by the Biotechnology Industry Organization (BIO) and Thomson Reuters. The report can be accessed at www.bio.org/edocs/BIO_ThomsonReuters09_study.pdf.
Although the study participants indicated "an increase in positive clinical news" as the second likely catalyst for a rebound, they softened that view with the assertion that overall research and development productivity in 2009-2011 would be the same as 2006-2008.
"Investors had forecasted a 15% rise for biotech stocks by mid-year, and in fact that proved quite short of the impressive gains that we have seen in the last several weeks," said John Craighead, Managing Director of Investor Relations and Business Development at BIO. "Moreover, to the extent that 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."
The perception study is an in-depth assessment of investors' views of the biotech industry, its current challenges, its relative valuation, and the outlook for 2009. The report aims to provide BIO members with an insider's perspective about what the asset management community values in the current economic climate and to foster more effective dialogue between company executives, shareholders, and potential investors.
"We are encouraged to see a recovery in the biotech sector," said Bill Haney, Global Head of Investor Relations Services at Thomson Reuters Corporate Services. "Nevertheless, investors are adamant that senior management be proactive and forthright with their communications. Given the current economic conditions, CEOs and CFOs must regularly reach out to the investment community to describe their objectives, plans and achievements."
According to study participants representing firms with $2.3 trillion in assets under management, including $266 billion in healthcare and $76 billion in biotech, the credit crisis has shifted the focus of investors. Over 80% acknowledge that the credit crisis has forced them to change their investment approach, emphasizing that a company's cash position is now more important than before. Overall, investors remain bullish about biotechnology. Two-thirds of the study participants expect biotech to outperform healthcare and 70% expect biotech to outperform the rest of the market this year.
Most investors pay little attention to activism in the biotech sector, according to the study. Looking at what the 'smart money owns' is the least popular source of new investment ideas and least important for research. Meeting with management is the most critical source of information when researching investments, followed by conferences and sell-side research, which is still considered important.
Other key findings from the study include:
About BIO
BIO represents more than 1,200 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world's largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world.
About Thomson Reuters Corporate Services
The Corporate Services business of Thomson Reuters provides a suite of solutions across the Investor Relations, Corporate Communications, and Business Intelligence functions. Leveraging more than two decades of experience serving the global corporate marketplace, our solutions are designed to increase the efficiency and effectiveness of business decision-making. Backed by knowledgeable client service professionals dedicated to proactive outreach and training, Thomson Reuters is the partner of choice for more than 6,000 corporations worldwide.
Contact Tracy Krughoff
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