Glimmer of hope for biotech: PwC

The value of the listed Australian biotechnology sector fell by 10 per cent in the second quarter of 2009, a not-unexpected trend considering the economic crisis, according to the latest BioForum report from PricewaterhouseCoopers.

However, the figures are worse if the big three of Australian biotech – CSL, ResMed and Cochlear – are subtracted. Minus these three major players, the sector suffered a 26 per cent drop in the quarter, which when added to a surprisingly good showing in the first quarter, means a decline of 31 per cent for the first six months of the financial year.

PwC life sciences partner Craig Lawn said the trend was not unexpected but there was light at the end of the tunnel.

“The biotech sector’s performance this quarter illustrates that there is always a glimmer of hope … with many good companies still kicking clinical milestones and funding goals in these tumultuous times,” Lawn said in a summary of the report.

“Despite the loss of value, many biotechs, where they have the funds available, are still progressing strongly through their respective regulatory hurdles with the key impact on value being how they access cash.”

He said a growing number of biotechs sensibly were looking for alternatives to venture capital, including partnering, mothballing smaller projects and selling interests. Others were exiting the sector entirely, he said.

For the near future, he said joint ventures with universities may keep some companies afloat until the crisis is over. Those companies with decent cash reserves are well placed to see it out, he said.