UK specialty pharma companies outperform biotech

Analysis

Shares in companies judged to be risky prospects have performed poorly this year, and the life sciences sector has been hit particularly badly by increasingly risk-averse investors.

In particular, the fate of small biotechnology companies has not been pretty; even an absence of news, as opposed to actual clinical failure, has been enough to send share prices tumbling. Specialty pharma companies, however, have escaped such a severe mauling. This bodes well for BTG, which this morning announced the acquisition of fellow UK company Protherics, with the aim of giving its specialty pharma ambitions a boost.

The table below shows the performance of UK listed biotechnology and specialty pharma companies. While both groups have declined, an investor more heavily exposed to the latter group will be doing considerably better.

With their lower risk business model and a more realistic chance of achieving profitability, this is not too surprising. Specialty pharma will focus on later stage products, leaving the high risk R&D to someone else.

This is exactly what BTG plans to do following the acquisition of Protherics. Over the next few months, the group will be culling early stage projects from the pipeline, while looking for niche, late stage products to acquire.

Given the early stage of the deal, full plans have not yet been announced, but some commentators questioned the lack of a definite therapeutic focus emerging. If the deal proceeds, an update should be given alongside preliminary results in May, and investors will be looking out for a more defined strategy.

However, given the track record of other UK life science companies this year, if the merger is a success, BTG shareholders should benefit in the future.
 

  Share price data Growth
  31-Dec-07 2008 (latest) 2008 YTD
     Specialty      
        BTG (£)  0.93  2.01  116.13%
        ProStrakan (£)  0.67  0.97  45.86%
        Goldshield Group (£)  2.75  2.47  (10.18%)
        Vectura (£)  0.54  0.48  (11.52%)
        Sinclair Pharmaceuticals (£)  0.71  0.53  (25.53%)
        Shire ($)  68.95  48.50  (29.66%)
        Plethora Solutions (£)  0.78  0.38  (51.28%)
        Meldex International (£)  0.60  0.25  (58.82%)
        Amarin ($)  2.60  1.00  (61.54%)
        SkyePharma (£)  0.12  0.02  (80.49%)
Average     (16.70%)
       
     Biotechnology      
        Acambis (£)  1.19  1.89  59.28%
        Proximagen Neuroscience (£)  1.25  1.17  (6.64%)
        Intercytex (£)  0.52  0.45  (13.46%)
        CeNeS Pharmaceuticals (£)  0.4063  0.3375  (16.93%)
        Antisoma (£)  0.25  0.20  (18.18%)
        Synairgen (£)  0.58  0.43  (25.22%)
        Protherics (£)  0.57  0.41  (27.31%)
        Ark Therapeutics (£)  0.94  0.64  (32.27%)
        Vernalis (£)  0.06  0.04  (34.02%)
        GW Pharmaceuticals (£)  0.69  0.41  (40.36%)
        Phytopharm (£)  0.30  0.17  (42.50%)
        Summit (£)  1.03  0.57  (44.39%)
        Silence Therapeutics (£)  0.69  0.30  (56.57%)
        Allergy Therapeutics (£)  0.39  0.13  (65.77%)
        Oxford BioMedica (£)  0.26  0.08  (69.61%)
        Alizyme (£)  0.58  0.17  (71.30%)
        Renovo (£)  1.34  0.29  (78.40%)
        ReGen Therapeutics (£)  0.53  0.11  (78.68%)
        Ardana (£)  0.43  0  (100.00%)
Average     (40.12%)

Related Topics

Share This Article