Biotech demand will continue to grow: analyst

The recent upswing in biotech share prices has acted as a trigger point for the increase in investment in the sector, according to sector analyst and BioShares co-editor David Blake.

And the increase in interest shown by institutional investors was likely to lead to even more demand within the sector, he said.

A total of 25 Australian biotech companies raised AUD$180 million in share placements and share purchase plans in the September quarter, a substantial increase over the $100 million raised during the whole of the 2002-2003 financial year.

"If companies raised $100 million in a bad year, then raising $180 million in a single quarter is pretty significant," Blake said. "What really amazed us was the speed with which it happened -- it was very businesslike."

Blake said he expected that capital raising activities would taper off a bit for established biotech companies over the next quarter or two, but said the market would enter into the IPO phase instead.

"That will have its own momentum and flavour," he said. "I would not be surprised to see $150 million or more in the next nine months just through IPOs."

At least six, and as many as 15 companies are expected to float before the end of 2004, including Australia's largest private biotech, Proteome Systems.