Biotechs recover from slump in Q2

Australian life science companies bounced back in the second quarter of 2011 after a rough start of FY12, according to PricewaterhouseCoopers (PwC).

The analyst firm's BioForum Report shows that its local Life Sciences Index grew 2.9% over the quarter, compared to a 1% growth in the ASX All Ordinaries.

The Life Sciences ex-majors sub-index fell by 1.4%, but this was a far less sharp decline than the 14.8% slump during the September quarter.

The biotech/pharma segment showed a marked improvement, growing 4.5% in the second quarter compared to a 12.9% slump in the first. The medical device index – which had slumped 12.6% in Q1 – fell by just 0.6% in Q2.

“Biotechs ended the year on a positive note, recovering most of the losses experienced in the September quarter despite the impact of the continuing European debt crisis,” PwC Life Sciences partner Manoj Santiago said.

He said the Australian segment could be in for more good times ahead, considering the strength of the Nasdaq Biotech Index, which grew 7.9% during the quarter.

“A comparison of the performance of the US and Australian Life Science indexes over the past several years demonstrates a loose correlation, with the Australian index lagging US performance by 6-9 months,” Santiago said.

But he warned that the European debt crisis and other global macro trends could threaten growth going forward.

Australian biotechs also raised the highest amount of secondary capital during Q2 than any time in the last two years.

The pharma/biotech segment raised a total of $81 million during the quarter conducting capital raisings. These included the $32 million placement and $3 million share purchase plan by Starpharma Holdings (ASX:SPL) and the $24.1 million placement and $3 million SPP by Phosphagenics (ASX:POH).