Biotech's Uncertain Future

Is the 2013 biotech craze sustainable?

By Karen Langhauser, Digital Content Manager

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In 2013, 108 biotechnology companies saw share prices at least double, and the value of mergers and acquisitions climbed more than 20 percent -- but will this biotech craze be sustainable in 2014?

As discussed in a Boston Globe article, the 2013 boom was driven by several factors, including the increasing preference of large drug makers to buy smaller companies to acquire drugs, rather than develop them in-house, and 2012's 15-year high in FDA drug approvals.

But as drug approvals in 2013 reverted back to the average of 28, industry analysts appear decisively divided on the fate of 2014 biotech and continued investments in industry innovation.

Some analysts claim biotech IPOs are cooling off as investors worry about risk. Noting the first signs of trouble for biotech IPOs in September of 2013, when late-stage treatment failures spooked biotech investors and started a sell-off of newly public biotech companies, analysts are claiming the biotech window of excitement has come to a close.

Yet, others maintain that with many biotech companies facing big catalysts later this year, 2014 has the potential to generate even more impressive returns than 2013.

 

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