BioForum Quarterly Review

Every quarter, BioForum reports on the Australian and US pharmaceutical, biotechnology and medical devices markets and the broader life sciences industry. As well as reviewing market performance, BioForum covers initial and secondary capital raisings, clinical milestones, partnerships and mergers and acquisitions.

Quarter 3: FY12

In the third quarter...

The life sciences sector performed very strongly in the third quarter across all market indices both locally and internationally. The PwC Life Sciences Index rose 11.7 per cent outperforming the All Ordinaries Index by 7.5 per cent.
The Nasdaq Biotech Index outperformed the broader index early in the quarter but ended the period just behind with a gain of 18.1 per cent. The Nasdaq Composite Index rose by 18.7 per cent as the US markets recorded their best quarter in 14 years.
“The Australian life sciences sector enjoyed its best quarter since December 2010 off the back of strong performance in domestic and global markets which is a very positive sign,” said Craig Lawn, PwC Life Sciences Partner.

Sector performance in detail

In the third quarter, the life sciences ex-majors post a strong gain of 14.3 per cent recovering from its losses in the second quarter

Significant improvements were also experienced by both the Biotech/Pharma and Medical Devices Indices in this quarter. Biotech/Pharma rose 13.3 per cent (4.5 percent gain in Q2FY12) while Medical Devices rose 8.1 per cent. Medical Devices (ex-majors) was weaker in the quarter with a small gain of 3.4 per cent whilst Pharma/Biotech (ex-CSL) had a strong quarter posting a gain of 19 per cent.

IPOs and secondary raisings

The trend of no Australian IPOs continued but this is expected to change going into the final quarter of FY12. In the US, three IPOs took place in the third quarter, all in the Biotech sector, raising $175m. This is a decrease on the last quarter when eight IPOs occurred raising $396m.

A quiet quarter was experienced in Australia for secondary raisings with $18m raised. Pharma/Biotech secondary raisings decreased from $185m to $9m while the medical device sector maintained the same level of secondary raisings as in the prior two quarters at $9m.

In the US, 42 secondary raisings took place totalling $2611m which is almost double the prior quarter. “This quarter is a telling story with the stockmarket’s strong performance reflecting positively on all sectors of the Life Sciences Index. Interestingly, there has been sustained performance since mid quarter which was also reflected in the Nasdaq Index,” said Mr Lawn.

“Looking at the two year history, there seems to be a developing trend where the previously tight grouping of the All Ords, Nasdaq and Life Sciences performance has decoupled and investor sentiment has moved to a pairing between the Nasdaq and ex-majors.”

“This quarter’s results show encouraging signs and trends but on a year to year basis (March 11 to March 12) the sector is still in negative territory and playing catch up from past losses,” Mr Lawn said.

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