Business
The S&P 500, FTSE Eurofirst 300 and
Dow Jones Industrial Average all endured a
Table 1: Biotechnology companies’ share price performance
chaotic time in the year to date, plummeting
throughout 2008 into bear market territory.
(January 1st-October 31st, 2008)
On the few occasions that the major indices
Index or company January 1st October 31st % change
rallied, lack of confidence swiftly returned
Nasdaq biotech index 831.98 734.67 –11.7
and the markets continued to fall.
The declines were most noticeable on the
Biotechnology companies
FTSE Eurofirst index, which fell by 38% to
Genentech ($) 67.40 82.94 +23.1
928.81, while the S&P 500 dropped by 34%
to 9336.93. The Dow Jones fell by 29% to Gilead Sciences ($) 45.34 45.05 – 0.6
9336.93. Overall, most of our
biopharmaceutical stocks outperformed
Amgen ($) 46.60 59.89 +27.4
these indices, perhaps due to their defensive
Biogen Idec ($) 55.87 42.55 – 23.8
nature, yet the variance between the stocks
is plain.
Genzyme ($) 74.75 72.88 – 2.6
During 2008, our five biotech stocks grew
Biotech average + 4.7
by 4.7% on average (see Table 1),
outperforming the Nasdaq biotech index,
which fell by 11.7% to 734.67. Our 10
The Swiss broker Helvea expects 2009 of atherosclerosis, despite showing a better
pharmaceutical stocks declined by 15.7%
to be critical for the pharma company. “With LDL-lowering effect. Merck and its partner
(see Table 2) although these outperformed
45% of AstraZeneca’s pipeline at risk for Schering-Plough had hoped that the trial
the Amex pharma index, which dropped by
generics and an unproven pipeline portfolio, would show an effect in intima media
19.8% to 269.99.
[it] faces an uncertain outlook in the mid-to- thickness, but no effect on plaque size was
It appears that volatility is greater in the
long term.” Helvea set its target price at found.
pharma group with year-to-date changes
£22.22, 15% lower than AstraZeneca’s Sour regulatory news continued in April
from –43% to +22%, whereas biotech spans
–24% to +27%. Healthcare consultant Emma
actual share price, as clinical news up to after Cordaptive (MK-0524A, ER niacin plus
Palmer Foster believes this variation
mid-2010 will be critical for the firm’s laropiprant) was put on hold. Weeks later
highlights the current state of the traditional
long-term survival. the US FDA refused the cholesterol
pharma industry.
Merck & Co’s share price has had the management product for primary
“There is the well-documented gamut of
toughest time in 2008. By October 31st, it hypercholesterolaemia-mixed dyslipidaemia.
challenges faced by the pharma sector –
had plummeted by 43% to $30.95, declining The rejection came as a blow as Merck was
patent expiries, decreases in productivity,
most notably in the first quarter as the first looking to the drug and a combination
pricing pressures – and many of the
of its regulatory troubles arose. follow-on product with simvastatin to offset
companies are struggling to meet these
It emerged that in the ENHANCE study its patent cliff.
challenges,” she says. “By contrast, the biotech
the combination product Vytorin (ezetimibe/ Merck’s year was dampened further by the
companies are generally considered to be at
simvastatin) was no more efficacious than Phase III clinical failure of taranabant for
an earlier phase of their evolution and so ezetimibe alone at reducing the progression obesity in October and charges relating to
many of them are at the stage of earnings
growth rather than stagnation or decline.”
Individually, the winners and losers were Table 2: Pharmaceutical companies’ share price performance
clear. AstraZeneca led the pharmaceutical
(January 1st-October 31st, 2008)
stocks with a 23% increase in its share price
Index or company January 1st October 31st % change
to £26.30. The firm’s year began with doubts
surrounding the patent risk of Nexium
Amex pharma index 336.70 269.99 –19.8
(esomeprazole magnesium) and Seroquel
Pharma companies
(quetiapine fumarate), the first of which hung
over the UK company until April. AstraZeneca (£) 21.47 26.30 +22.5
AstraZeneca agreed a settlement
with Ranbaxy, which will keep the generic
Novartis (CHF) 54.57 50.99 – 6.6
version of the gastroesophageal reflux
Roche (CHF) 192.00 176.80 – 7.9
disease drug off the market until 2014. The
company’s share price rose by 7% to £21.22
Merck & Co ($) 57.37 30.95 –43.3
on the news and gradually continued
GlaxoSmithKline (£) 12.70 11.97 – 5.7
climbing until July when a US federal court
upheld AstraZeneca’s patent for the Johnson & Johnson ($) 65.91 61.34 – 7.0
antipsychotic Seroquel.
Wyeth ($) 43.89 32.18 –26.7
The decision against Teva Pharmaceutical
Industries for AstraZenenca’s second-largest
Lilly ($) 55.25 33.82 –38.8
product meant that it’s unlikely that any
generic versions of the drug will enter the
Sanof_i -Aventis (€) 62.28 49.43 –20.6
US market before 2011. The news buoyed
Pf_i zer ($) 22.91 17.71 –22.7
the company’s share price further and
helped it towards its yearly high of £27.66
Pharma average –15.7
on September 2nd, 2008.
26
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