Biotech stocks had a tough 2009
Biotech stocks took a turn for the worse in 2009 as the major players dealt with regulatory, manufacturing and political issues as well as a deep recession, but their fortunes could turn in the new year if they get added patent protection.
They were the exception in what was otherwise a bullish year for health care stocks, which benefited as investors sought defensive plays in a turbulent market.
Biotech stocks were the laggards of the Standard & Poor’s 500 Health Care index, on track to post a nearly 8 percent loss for the year, while the rest of the health care sector has logged gains of up to 66 percent, according to FactSet.
The decline in bellwethers such as Amgen and Genzyme was a key factor in weighing down the overall sector. On a broader scale, concerns included a backlog of drug approvals at the Food and Drug Administration, a decline in buyout activity, and fears over health care reform.
While the S&P 500 index is on track to gain about 25 percent in 2009, its large biotech components are down about 7.8 percent. The Nasdaq Biotechnology Index, with a broader array of biotech companies, rose 17 percent, but that pales in comparison with the broader Nasdaq composite, which is set to gain about 45 percent.
Pharmaceutical companies, which saw a flurry of buyout and merger activity, are among the strongest performers with a 25 percent boost, a reversal from a lackluster 2008. But the lines between pharmaceutical and biotech companies are diminishing through a range of buyout and development deals. Traditional pharmaceuticals are made by synthesizing chemicals, while biotech-based drugs are made using living cells.
Meanwhile, hospital operators and insurers are on track to rally 62 percent, despite the recession, on hopes that health care reform in Washington could result in more insured patients and revenue in the future.