Stronger old guard boosts Intersuisse biotech index

September was a kind month for the biotechnology sector -- the Intersuisse biotechnology index indicated that the sector more than made up for its loss in August, moving ahead by 4 per cent, almost 1 per cent more than both the All Ordinaries and the Nasdaq.

However, the Intersuisse index is slightly inflated by the good fortunes of heavyweights Cochlear (ASX:COH), which gained 20 per cent during the month after competitor Advanced Bionics recalled its implants, and CSL (ASX:CSL), up 7 per cent. The index covers 77 companies, also including Resmed (ASX:RMD).

The Southern Cross Equities Index, which leaves the bigger players to the side, was up 2.5 per cent over the month.

"The markets are fairly healthy at the moment and we're probably at the tail end of the biotech bear market which has been going on since April," said Southern Cross biotech analyst Stuart Roberts.

At month-end, Acrux, Proteome Systems and Sunshine Heart joining the lists, although all are now trading at discounts to their issue prices. That was in contrast to August IPO Somnomed, which advanced 41 per cent in the month and is now trading around the $0.55 mark.

The standout performer in September was Genetic Technologies, up 79 per cent on positive developments in its US legal action and a licence agreement with Genzyme. Pharmaxis and VRI BioMedical also recorded gains above 20 per cent.

"It's been an expanding sector and is moving well," said Intersuisse analyst Peter Russell.

But he cautioned that biotechs might struggle to maintain interest as investors turn their attention elsewhere. "At the moment everyone is looking for more exiting things," he said. "The resources field is booming, and mining is more exciting for the speculative investor and the general market is going well. We've found there is less appetite for biotechs, or it is more of a refined appetite."