Forbes: three misunderstandings about biotechnology

Source: on March 21, 2014, the NASDAQ Biotechnology Index fell 10% sharply After this big fall, the biotechnology index, which has been popular for two years, has risen only 4% in total Investors are worried that the bull market in these two years has come to the end The progress of medical technology is of great significance for human beings to improve their quality of life, but it doesn't mean that the stock of biotechnology companies will go all the way Biotech stocks can rise on the basis of a high return drug discovery or a new breakthrough in research, which has a lot of uncertainty, but many investors only see a beautiful rainbow and ignore a storm just in the past Here are three different points of view that I got from investors, executives and ISI companies' investigation of the buyer's purchase motivation, but I think it's totally blind optimism Ideal: investors believe that the power of R & D cannot be ignored: the R & D industry has gradually weakened in recent years In 2009, many investors thought that the probability of drug test success was very low, but now investors seem to ignore the fact that the recent drug test failure rate is more than 90% In the whole pharmaceutical industry, the difference between biotechnology companies and traditional pharmaceutical companies is mainly the difference in business model rather than basic science Biotechnology is also trapped in the chemical molecular ring, which has not changed significantly in recent decades Bernstein analyst Geoffrey Porges recently studied new drugs from big biotech companies celgene, Gilead and Biogen idea, noting that most of their new drugs use previously known pharmacological effects But these companies have not stopped their research and development Celgene is now trying out a new compound, sortercept Biogen's biggest task this year is to collect data related to anti lingo project, which is a new treatment for multiple sclerosis, but it needs funds Alexion and vertex may face losses for a longer time in the future than in the past Drug development is really too difficult Ideal: investors feel FDA's recent attitude is friendly and realistic: This is an illusion that there are many people who believe that FDA has become more friendly and easy to communicate with pharmaceutical companies in the past few years, and it has become easier to pass the approval of drugs This view is very dangerous I have been trapped in this trap for many times, and it turns out that this idea is wrong Several decades ago, the FDA was very friendly to pharmaceutical companies, but this caused serious adverse effects Many unsafe drugs were put on the market, including the painkiller Vioxx and the antidepressant paroxetine FDA officials are concerned that Congressmen will target them for adverse drug reactions, so the subsequent approval has become very cautious However, the FDA has also made some changes in management, especially in major drug breakthrough innovation The most obvious is anticancer drugs, which have become the fastest growing drugs in all diseases, and the cooperation between FDA and these companies is closer But the FDA still maintains a rigorous style It's as difficult to approve a drug as before, and it can withdraw its decision at any time when there's a new discovery Of course, a lot of heavy new drugs have been approved in recent years Maybe the FDA regulation has been relaxed a little, or the R & D efficiency has improved a little bit compared with the beginning of this century But maybe it's just an investor's fantasy from time to time: the chance to change makes no sense Ideal: investors believe that good drugs must have high returns In the future, sovaldi will be forced to reduce its price The most important thing for pharmaceutical companies is not how many kinds of new drugs they can develop, but how high they can set the price for new drugs The immediate cause of the crash was the panic caused by congressmen asking Geely to lower the price of its hepatitis C drug, sovaldi I've heard some complaints from the management of large pharmaceutical companies before: in ten years or more, their drugs will face increasing price pressure Novartis CEO Joseph Jimenez said negotiations with the government will become increasingly difficult and pharmaceutical companies will be forced to take on more medical related social responsibilities It may not have to wait for the future, but it can happen at any time in small biopharmaceutical companies But it can't be the same for all biotech companies Wall Street is worried that sovaldi may not be able to maintain its current sales volume in the future, but if a drug can take the lead in sales for several years, it has realized its own value Regeneron and its partner Sanofi have several potential blockbusters in their common breeding pipeline, not only their cholesterol lowering drug PCSK9, but also their rheumatoid arthritis and asthma drugs Personally, vertex's combination therapy for multiple sclerosis will have encouraging results this year Even in the worst of times, there must be some biotech stocks worth buying in the market But investors should not think that the pharmaceutical industry has changed dramatically in the past few years, which is far from coming.