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Biotech leads market

THE Australian biotechnology sector outperforms the rest of the share market by almost 30 per cent as global funds pour into Australia on the back of a weak Aussie dollar and enthusiasm for invest-ing in life sciences.

Greg Wheeler of Deloitte Touche Tomatsu, one of the big five international accountancy organisations, says biotechnology stocks have become the flavour of the month, now producing better results than traditional shares.

Mr Wheeler urged that the State Government should provide incentives for companies to locate in WA instead of the Eastern States to capitalise on this new growth.

“Initially the research programs are driven by people with a passion for the subject. But ultimately they need funding and support. That is where the Government and business can help not only to encourage the research programs but also to stop the researchers leaving for overseas or eastern states,” he said.

“There is a great risk that we could lose our intellectual property if Governments and local industry don’t provide the infrastructure to keep it here.”

Deloitte has focused on live sciences investment in the past five years retaining specialists from the medical world to advise clients on life science investment.

As part of this focus Deloitte runs two surveys a year to assess the trends in biotechnology stocks.

The most recent covered the period from October-February (of the 53 Australian biotech com-panies surveyed nine were from WA) and for the first time since January 1997 the Australian investment in biotechnlogy has outstripped the US Nasdaq Biotech Index.

And more significantly, while the world is suffering a slump in the share market, the biotech-nology sector outperforms the rest of the share market by almost 30 per cent

“Between October 1, 2000, and February 28, 2001, the Australian Deloitte Biotech Index rose by 19 per cent, however, if CSL is excluded, the index rose by a massive 30 per cent,” Mr Wheeler said.

“The exclusion of CSL results in a higher increase due to CSL’s relatively smaller improvement of 4.9 per cent. Over the same period the ASX All Ordinaries showed a rise of only one per cent.”

Mr Wheeler said the market was being driven by a number is issues.

“First mineral and dot.com in-vestments have stalled so capital is looking for somewhere to go. I think that both minerals and dot.com markets will re-emerge but in the meantime biotechnology is attracting the speculative invest-ments.

“It is going into biotechnology for a number of reasons and Australia is uniquely positioned to benefit from this trend.

“We have an aging population that is very keen to see research done on life medicine so there is a strong self interest motif.

Also driving the market are companies that are abandoning their traditional markets, such as minerals.

“West Perth-based Exodus is a prime example,” Mr Wheeler said.

“It has switched its emphasise from gold exploration and mining to cancer research changing its board and management structure to cater for the switch.

“Shareholders want value for their shares so these companies either have to change of wither away, but they must make changes in their boards to cater for their new focus.”

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