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Strong M&A Activity, Stagnant Share Prices Await Genomics Sector in 2002

SAN FRANCISCO, Jan. 7 - Smaller genomics, proteomics, and bioinformatics companies will look to take part in mergers and acquisitions in 2002 while bigger firms will seek to find those missing pieces that will let them make the jump from tool and tech shop to drug discoverer, the managing director of healthcare banking at JPMorgan H&Q said on Monday.

 

In his opening remarks at the 20th annual JPMorgan H&Q Healthcare Conference here, David Deming also said that near-term share prices for companies in these segments this year will not likely see an increase. He also said it may take three or more years for genomic companies to yield the promise felt at the completion of the human genome project.

 

"[There was] disappointment in 2001," Deming said following his brief speech. "[The companies were] not making money as soon as people thought they would."

 

Biotech companies "either are able to drive a business model [that shows] that they are the preferred provider for their niche" or that they are moving toward product development, Deming said following his brief speech.

 

On the private equity side, there is a queue of investors ready to commit. "Now, we have to turn investors away," Deming said of biotech deals. "All investors are now in biotech. It is 1.5 percent of the S&P. Everybody has to pay attention to it."

 

For the bioinformatics segment the outlook is no less murky. "Two years ago everybody thought they needed to own it [bioinformatics component]," said Deming. Although now there appears to be "more and more interest by pharmaceuticals and bigger biotech to get access to it, it doesn't necessarily feel like they need to own it. Just get access."

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