Stockwatch: Biotech results indicate sector trajectory
This article was originally published in Scrip
As the full year, and last quarter 2010 earnings season starts to draw to a close, we can discern current common themes – sales and earnings misses were as a result of US healthcare reform, European cost containment measures and company restructurings, and there will be more of the same in 2011. The positive earnings surprise, that investors had hoped for has largely been absent but in its place, this week, we saw a much more fundamental sign of where profitable biotechnology companies may be headed.
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The prices of biotechnology and pharmaceutical sector indices continue to be comparatively robust in the face of big falls in global markets as investors expect new drugs and vaccines to be generated by the sector. While it is largely accepted that the life science sector will eventually ride to the rescue, bumper profits are far from guaranteed.
Pharmaceutical shares are stronger than most as world stock markets dive downwards, but they are not immune to the coronavirus fallout. The effects will be felt by biopharma companies across many areas of their activity.
Alnylam’s fourth-quarter and full-year 2019 earnings announcement was only one of eight announcements made by the company since early February. With the fundamental basis of its orphan drug business model still unvalidated by a profit, perhaps the more recent announcements are meant to distract investors’ attention with different metrics.