After a few tough years, the investors became alive to the biotech shares again last year, and 2003 was a fantastic year for the biotech companies. However, the outlook for 2004 is not as bright due to the falling number of approvals, changes in subsidy rules and soaring expectations, etc.
The pharmaceutical shares have been standing still compared with the overall equity market throughout 2003, and the pharmaceutical companies have in recent years been suffering under patent expiries, which the sector has not been able to counter by the development of new drugs, battles against copy-cat firms and increased focus on medicine prices all over the world. However, the outlook for 2004 seems brighter, and the author expects growth to accelerate.
Most indications thus point towards a sector rotation back to the defensive industries (including the pharmaceutical stocks) in late 2004. However, in the long term, Bjarne Gier has high hopes for companies operating in the drug industries - both pharmaceutical and biotech companies - due to more growth potential, the opening of new markets, many not adequately controlled diseases and the rising number of elderly people.
Read the article "Sector rotation will benefit pharmaceutical stocks in 2004" in Focus no. 73 at the Exchange’s website www.cse.dk.
