This week, Wood Mackenzie, a research and consulting firm based in Edinburgh, UK, reviews recent trends in biotechnology stocks.

After a sharp drop in late February caused by a market correction that saw indices plunge in all fields, by mid-March the Nasdaq biotechnology index resumed the overall rise that has been its general trend since July 2006.

In the past two months many companies have published their annual reports from last year, as well as first-quarter results for 2007, and a generally strong showing has underwritten the rise in the index. Two winners were Californian heavyweight Gilead, driven by strong sales of its HIV drug portfolio, and New Jersey's Celgene, fuelled by strong sales of its blood-cancer drug, Revlimid, who both saw their share prices rise in value by almost a quarter.

But the big news is the acquisition of one of biotechnology's key players, Maryland's MedImmune, by UK pharma giant AstraZeneca in late April for US$15.6 billion (see Nature 447, 131; 2007). AstraZeneca wanted biological manufacturing expertise and infrastructure, whereas MedImmune has struggled with a weak pipeline of late-stage drug candidates. MedImmune's share price, already rising as a result of strong sales in the first quarter, gained 18% on news of the offer — which must still obtain regulatory approval. Meanwhile, Californian diagnostics company Biosite is the subject of a bidding war between California's Beckman Coulter and Massachusetts' Inverness Medical Innovations, causing Biosite's share price to rise by almost four-fifths over the past 2 months.

Because the market for public offerings in biotechnology remains tough, mergers and acquisitions are increasingly the life blood of the industry — and the preferred exit for investors.