Yahoo Finance Pfizer, other drug giants to drive biotech
It’s a ‘bubble’ many are waiting to be popped but not all biotech investors are holding their breaths.
Andrew McDonald, the chief executive officer of LifeSci Partners, which runs two biotech exchange-traded funds – the BioShares Biotechnology Clinical Trials Fund (BBC) and the BioShares Biotechnology Products Fund (BBP) – says now is the time to get in, “you should buy the sector on those dips and if you do, the sector generally rebounds in two months.”
Despite ending April on a painful note, biotech stocks have been very profitable for their stockholders. iShares Nasdaq Biotechnology ETF (IBB) has more than tripled the return of the S&P 500 stock index (^GSPC), over the past five years.
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So far, Q1 earnings results have been mixed for the sector. Biogen (BIIB) and Celgene (CELG) reported disappointing sales. On the flipside, Amgen (AMGN) and Gilead (GILD) performed for their investors in the quarter.
McDonald believes long-term fundamentals of the sector are still in tact for the biotech sector and more deal making especially from the big companies like Pfizer (PFE) will drive growth and notes Abbvie (ABBV) acquiring Pharmacyclics (PCYC) for $21 billion.
IPOs are another driver McDonald is eyeing “right now we see it cooling off a little bit but this week is one of the stronger weeks with about 9 IPOs on the calendar this week."
For investors concerned about pricing pressures, McDonald isn't as worried and said “it’s more a headline risk, it’s not going to actually materialize, the innovation as it’s occurring in this country, where there are opportunities for drug makers to charge a lot of money, that in turn drives the innovation.”
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