Another flat quarter, but PwC expects biotech recovery

The latest edition of PricewaterhouseCoopers' quarterly BioForum report is published today, and shows a second consecutive decline in Australian life science stocks in Q4 of the 2004-05 financial year.

The falling Australian biotech and device market was a marked contrast with a revitalised Nasdaq biotechnology index, which increased 7.5 per cent in the quarter, the report shows.

But PwC partner Andrew Sneddon said he believed the decline would not continue for much longer, and expected the sector to recover in the medium term. The BioForum report said that as the life science sector regrouped, it would remain relatively flat over the next 12-18 months.

The BioForum reports showed that while the majors -- CSL, ResMed and Cochlear -- continued to keep the sector afloat, successful secondary financing was adding buoyancy to many stocks. In the quarter covered by the report, AUD$230 million was raised by 19 companies, compared with $19 million in the previous quarter.

Sneddon said that while the US market had improved significantly, its growth would not necessarily be reflected across the board in Australian life science stocks. But companies with good management, healthy cash reserves and likely cash flows would help to regenerate the sector.

He said the traditional model for biotech -- developing a technology and taking it to market -- was no longer enough to guarantee success.

A comprehensive overview of the BioForum report will appear in an upcoming weekly edition of Australian Biotechnology News.