ross horley video, page-35

re: billions of dollars annual report released on asx site tonight .. good read. be interesting to see how many of those top 20 pbio holders end up in the top 20 shareholders ....

and this

Biotech and health care: A new frontier
by Alex Dunnin and Michelle Baltazar

Just as information technology was a major investment target last decade, biotech and health care is shaping up as major focus for the next decade. Our finance writers reveal why the experts say, “In the next two years, anything you buy now will double”.

The superannuation industry is slowly waking up to the potential of Australia’s biotech sector (biological technology and life sciences), and may well benefit from the rounds of clinical trial announcements in the pipeline for next year.

Top-performing and locally based fund MTAA Super started the year by announcing a landmark $35 million joint venture deal with Bio Innovation SA, a South Australian-based bioscience research and development entity and facility.

Then last month one of the country’s largest fund managers, and also Canberra investor, QIC followed suit when its biotech arm, the Queensland Biotechnology Fund (QBF), bought a 20 per cent stake in Emerging Growth Capital (eG Capital), a financial advisory and brokerage firm that specialises in the life science and biotechnology sector.

Neil Colledge, QBF’s chief executive, said they invested in eG capital to get a wider deal flow.
Athola Maritz, head of research at eG Capital, said that 2007 could well be a big year for the sector because most companies will be finishing their clinical trials or reporting on them.

“The biotech sector has been aggressively sold down in the last 18 months and that’s partly because nothing is happening. Certainly in the next six to 12 months you should see [that change],” said Maritz.
But despite the surge of institutional interest, the Queensland Government’s chief scientist, Professor Peter Andrews said Australia’s super funds are still lagging compared to US funds which spend five to six times more in the segment than we do.

“I can understand why it’s difficult for super funds in general to get into biotech… but it’s important they take the trouble to consider it and other alternative asset classes in order to return the best value to their members,” said Andrews.

Andrews argued that fund managers should stop just following the index. “These guys are professionals. They have to be doing better than that, particularly in emerging industries. Look at the returns that fund managers who invest in biotech achieve versus the ones that don’t take the trouble,” he said.

The secret to understanding biotech is to recognise that the global pharmaceutical sector now outsources 20 to 35 per cent of its R&D to biotech companies, compared to 5 per cent 20 years ago. In this way biotech is very much like the mining sector.
“The impact is that a little biotech company doing the research can get a substantial slice of the action. That’s a huge opportunity for super funds.”

For example, US-listed biotech group Amgen grew from zero to A$112.3 billion, providing a windfall to the early venture capital, private equity and institutional investors that invested at the start.
Even if Australia can’t become one of the world’s top 10 pharmaceutical companies Australia can become an integral supporter of companies that are, said Andrews.
Colledge echoed this, saying the red-hot mining sector has taken all the attention away from biotech despite the equally high returns that can be found in the sector.

“On a simpler level, the biotech sector is undervalued. It’s forgotten. But in the next two years, anything you buy now will double,” said Colledge.
Another side to biotech investing is in heath care products and therapeutic goods, but you need to understand the differences to really see the opportunities.

Bill Mobbs, chief executive of Canberra head-officed health care devices manufacturer ITL (which has manufacturing plants in Sydney, Melbourne and Malaysia) said, “The sector has two main components: health care services and devices; and pharmaceutical and biotech.”

“Health care products are an industry that is almost recession-proof because people will always need health care. This is an industry that suits an aging population,” said Mobbs.
“They can also come to market quite quickly. It’s quite different to therapeutic goods with their extraordinarily long gestational periods.”

Just as information technology was a major investment target last decade, biotech and health care is shaping up as major focus for the next decade. The sector is not without its risks, but the returns, if you get it right, could be spectacular. No wonder specialist US fund managers are starting to search down under for opportunities.

Alex Dunnin is managing editor of the Rainmaker Group and Michelle Baltazar is the group’s senior writer.


Wednesday, October 11, 2006