Merchant bank Burrill & Company (San Francisco, CA) says the quarter has been “exceedingly disappointing.” Its chief executive Steven Burrill blames particularly the continuing erosion of profits in the pharmaceutical sector, which has prompted a general tightening of purse strings by investors in the life sciences; a series of product disappointments; and legal blows such as the $500 million judgment against Genentech (S. San Francisco, CA) in its dispute with City of Hope (Duarte, CA) (see p. 763). With the weakness in the wider financial markets, biotech has “felt the sting,” he says.
“This is certainly the worst quarter of the worst year, in all sorts of ways,” agrees Tom Kass, healthcare analyst at EFG Private Bank (Zurich, Switzerland). “We have always had the risk of product failures. But now, with affairs like ImClone and Elan [Dublin, Ireland] (see p. 764) we are seeing Enronitis filtering in. And biotech, because it's such an emotional business, is very subject to hyping.” Denise Anderson of Bank Julius Baer (Zurich, Switzerland) concurs. “Biotech is always a high-risk proposition and investors look for quality in management to help mitigate that risk. With ImClone, concerns about trust have rippled through the industry, depressing share prices and preventing IPOs [initial public offerings] and other fund raising.”
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