A good time to invest in pharma and biotech stocks again:
Drugging the IPO market

It’s been a pretty quiet year for the IPO market. But we’re not too far behind last year’s pace. As of October 29, 2002, a total of 61 IPOs have debuted, compared to 64 in the same period last year.

Surprisingly, there’s one sector that has remained resilient. In the past few years, technology IPOs (computer hardware and software products and services) dominated the new issues market.

But this year we’ve seen a change. Of those 61 IPOs, only seven were technology companies. And get this: they only managed to raise a total of US$539 million.

Compare this to the health products and services industry, which includes biotechnology and drugs. Eleven companies from this industry managed to raise approximately US$3.5 billion! Not bad, in this market climate!

IPOs are a good indicator of the market’s health. And we can see that investors have lost interest in computer technology, but still believe in drug discoveries and medical advances. To me, this is a fundamentally bullish indicator for the entire sector. n