Aussie biotechs must plan for weakened dollar

The Australian Life Sciences Index grew 2.2% in Q413, despite a weakening Australian dollar - but the forex slump is likely to pose challenges for the sector.

PriceWaterhouseCoopers Australia’s latest BioForum report suggests that with the dollar likely to remain depressed for the next 12 to 18 months, life science companies need to start thinking about what their capital raising landscape looks like if the exchange rate falls to 80 US cents.

While the forex slump does present challenges to the sector, it also presents opportunities. With investors becoming less focused on the mining sector, life science companies have a chance to step up and take a greater role in the Australian economy.

“Now is the time to develop a persuasive story around the benefits of investing in Australian biotechs,” PwC partner Manoj Santiago said in the report.

Even though the Australian Life Science Index significantly outperformed the 4.1% slump in the All Ordinaries during the fourth quarter, it did not replicate the strong performance of the US life science IPO and financing market.

“IPOs in the US totalled $4.4 billion coupled with $26 billion in secondary raisings,” Santiago said. “Comparatively, Australian experienced no IPOs and raised $446 million on the secondary market.”

The top performers over the past four quarters include iSonea (ASX:ISN), which has delivered an impressive 544% return, as well as Neuren Pharmaceuticals (ASX:NEU), Allied Healthcare (ASX:AHZ) and Novogen (ASX:NRT).

Regulatory, clinical and financial setbacks respectively were to blame for the negative returns of bottom performers Bioxyne (ASX:BXN), Pharmaxis (ASX:PXS) and Bone Medical (ASX:BNE).

The full report can be downloaded from the PwC Australia website.