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Biotech expected to grow despite financial crisis

Large-cap biotech stocks are safe to invest in, says a report by Barron’s. They aren’t risky or expensive anymore, as many claim, despite their reputation. Of course, biotech stocks have fallen and aren’t near their highs posted in August, but they’re still “in a good shape” when compared to other industry branches (the AMEX Biotechnology Index remains 36% off its record in August).

Barron’s asked a number of experts to talk on the issue. “The big players in the biotech industry will grow despite what happens in the economy.” says Evan McCulloh, Franklin Biotechnology Discover Fund. “When the value of other stocks is falling, there is a positive vibe around big biotech stocks.”

An expert from S&P Equity Research said that the large-cap biotech stocks could rise by 20% anually over the next 3-5 years. WCM’s Will Muggia said that big biotech stocks are the only stocks that he believes will rise over the next couple of years.

However, there are some risks, as always in the investment world. Rising unemployement rates and patients cutting back on their meds could hurt the companies. On the other hand, Obama’s program defined healthcare as a priority, so there there should be new legislation and pricing controls in sight.

One Response to “Biotech expected to grow despite financial crisis”

  1. Jes Says:

    Except that the biotech firm _creation_ pipeline _is_ being shutdown by the crisis (start-ups).

    Existing firms can’t and won’t be creating most of the future innovations so losing the pipeline *is bad* as it is in any type of high tech business.

    Given the long product cycle time for biotech, that means that when the pipeline finally empties it will take longer to fill again to reach market revenue levels again.

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