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Big-Cap Biotech Stocks Taking Hit on Wall Street

Written by on Sunday, July 1st, 2007

Big-cap biotech stocks are no longer exceeding expectations on Wall Street, according to a report by

That report states as follows:

Shares of Genentech (DNA) the world’s biggest biotech by market cap, have declined 15% since reaching a 52-week high on Jan. 22. The stock fell 5% in June, even after a two-day surge last week. Amgen (AMGN) is down 19% for 2007 and 16% the last two months.Celgene (CELG) has dipped 13% since reaching an all-time high on May 22.  Financial returns aren’t the problem. Those three firms along with peers like Gilead Sciences (GILD), Biogen Idec (BIIB) and Genzyme (GENZ) regularly have double-digit sales and profit growth. Most are expected to continue doing so over the near term. Genentech has grown sales and earnings at least 36% in each of the last 10 quarters, but analysts expect growth to decelerate in each of the next four.

What is to blame for this change?

The report points to new challenges facing the industry such as the Food and Drug Administration requiring more data and causing more delays in drug approvals, and also to the new fears of generic competition, which traditionally were only an issue that big pharma had to contend with. 

These statistics provide a first glimpse at how biotech may be impacted by the newly proposed generics bill as well as some of the other issues currently facing the industry.  While factors other than these issues are likely affecting the stocks too, there is certainly reason for the industry to take note of how issues in the news may already be affecting sales of stock. 



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