Majors help deliver strong quarter for Australian life sciences: PWC

Price Waterhouse Coopers has released its quarterly Bioforum report showing that the Australian life sciences sector is outperforming the wider market despite a fairly slow start to the year.

During the last three months the Life Sciences Index grew 9.2 percent compared to the previous quarter bringing the total value of the Australian sector to just over $32 billion.

This growth was way ahead of the broader All Ordinaries and reflected a similar trend in the U.S where the Nasdaq Biotech Index rose 11.3 percent compared to an increase of 5.7 percent for all of Nasdaq.

The strong performance of the local sector owed much to impressive gains made by the majors during the quarter, especially CSL which managed a 12.1 percent increase in its share price over the three months. The other majors ResMed and Cochlear also performed well, gaining 18 and 5.5 percent respectively.

In contrast the ex-majors combined recorded a fall of 0.9 percent for the quarter, their first quarterly drop in over 12 months. Year on year the figures are a little more pleasing, however, with growth of 23.6 percent compared to the previous corresponding period. Still, the majors were the stars here too, posting growth of 83 percent, compared to an increase of 38.5 percent for the All Ordinaries.

IPO activity was understandably fairly subdued, with CBIO the only company listing during the March quarter, raising only half of the $14 million or so it had planned. The previous four quarters saw not one IPO, however. In the U.S four companies listed during the quarter, raising $372 million, a slight improvement on the previous three months.

In Australia PWC reported a dramatic decline in secondary financing for Q3, which saw only $93 million raised, compared to $201 million for Q2. Medical devices companies continued to outperform their pharma / biotech peers managing an increase of 10. 3 percent, with heart device company Heartwave leading the charge with a rise of 35 percent. Pharma/ biotech managed a comparatively modest 7.9 percent increase, although without the majors it actually fell by 5.1 percent.

PWC noted that the biggest winner of the quarter was natural biotech products company Hollista Colltech, which saw its market cap increase a staggering 1,456 percent for the four months. The wooden spoon went to lab separations and precast gels specialists Nusep, which saw its value fall 81 percent.

Finally, the quarterly report contained a cautionary note warning that life sciences companies are especially vulnerable to the impact of current global market volatility.