The language of biobusiness

Spend any time in the biobusiness sector and you learn one thing very quickly: it pays to be bilingual. And not in French or Spanish or Japanese, but in the languages of science and money.

John O'Connell, a biotechnology analyst at Macquarie Equities with degrees in dentistry and economics, is one who says biobusiness is a whole lot easier if you can understand life sciences and the financial markets, and you can speak both languages.

"Our greatest role is to educate the market place," he says. "The bottom line is to turn science into numbers. It's an art, more than a science - having to weigh up a company quantitatively and qualitatively."

But, according to Dr Shirley Lanning, business development director at TSL Group, a consultant firm for researchers as well as public and private biotechnology companies, people with that skill are few and far between in Australia.

"There are very few qualified biotechnology analysts in our country," she says. "The coverage is awful. They don't understand the business, the nature of biotechnology commercialisation.

"It's not amenable to conventional forms of analysis."

And yet there are analysts like Kiara Bechta-Metti, at Deutsche Bank, with a degree in molecular and cellular biology as well as considerable commercial experience, who says that most of her peers have come from the health services side.

"We all have understanding but the depth of knowledge probably varies," she says. "We all have to read journals and go to conferences and keep up with technologies. Those that don't have molecular biology experience can learn about genomics and proteomics."

The sub-dialects also go beyond knowing about research fields within science, according to Dr Sally Warneford, a former analyst who is now an investment manager at Credit Suisse Asset Management.

"Biotechnology analysts are not really covering the biotechnology industry well," Warneford says. "Most of the analysts cover the big players such as ResMed and Cochlear, but only a handful spend time on these smaller stocks."

Analyst Andrew Goodsall, who recently left Burdett Buckeridge and Young to join Salomon Smith Barney, says the analyst's role is to provide research into the major healthcare and biotechnology stocks listed on the Australian Stock Exchange.

Teams of biotechnology analysts are growing at most of the major financial firms, including Deutsche Bank, Salomons, Macquarie Equities, Merrill Lynch, UBS Warburg, Credit Suisse Asset Management and Deloitte Touche Tohmatsu.

Around Australia the major broking firms have at least one researcher who follows biotech stocks but most do not write in depth about those companies, Goodsall says.

"For young biotechnology companies there is not much news on the financial front, so there are no regular reports, but it is critical to watch that the company hits its milestones and operates within the budget," he says. "For the bigger companies, essentially the two core periods are the results seasons when a company must publish finances at each half year, as well as events.

"The other key thing is to try to compare a company's research against other research efforts in the market already, but that's difficult to know - [competing] companies will not often open up the full dossier of molecules they are researching."