I thought the outlook statement by the analyst was relevant as...

I thought the outlook statement by the analyst was relevant as well. Interesting that the analysts other Top picks with Starpharma are Mesoblast, Medical Developments and Bionomics and all are expected to attract high partnering interest for their drugs

We continue to believe that the fundamentals and demographic trends for the healthcare and biotech sector remain strong for 2017. We also believe that some of the other factors especially on the political front in US which caused a lot of volatility and pressure on the sector in 2016 have abated.

Most recently in the US the 21st Century Cures Act was signed by president Obama into law. This legislation aims to increase funding for medical research, speed the development and approval of innovative treatments including regenerative medicines, cancer, mental health and fight opioid abuse. We believe all 4 of these disease areas will remain key areas of growth and licensing activity and all the companies who have made our Top pick list are targeting one or more of these areas and we expect high partnering interest for their promising assets.

Drug pricing was the key concern for the industry last year. We believe government price controls are less likely, however we do believe the scrutiny on drug pricing will not go away. Amidst this backdrop we believe that it will no longer be possible for companies to rely on exorbitant price increases to bolster their revenues. Large pharmas continue to be struggling with dwindling pipelines and revenue erosion from expiry of patents on their blockbuster products resulting in competition from low priced generics. There remains talks about tax reform in the US, which would allow US companies to repatriate their overseas cash at a lower tax rate which if eventuates may provide these companies with a much larger war chest to be able to aggressively go after the most promising innovation.

As a consequence we continue to expect cash rich companies to keep looking for promising, innovative products outside their company and expect licensing and M&A activity to continue in 2017 which bodes well for the outlook for the ASX listed biotechs and healthcare stocks we cover. Companies likely to attract suitors will be those that are truly innovative, target diseases that are particularly likely to increase in incidence with rising ageing population and areas with unmet need with relatively limited competition and those that have the ability to cut down on healthcare costs and offer an expedited path to regulatory approval.