Researching Biotechs to find a cure for recession

Well the biotech sector is starting to get renewed attention. No real surprise as it’s one of the bastions that stock market investors go to when a recession hits. It’s part of the group that gets a boost every time the R-word is mentioned, along with Gold (which is already on a tear).

But recently there has been a few pot shots taken at a few of the industry standards. The big boys are not looking so good, according to some, and that leaves the question of where to go. Some think that the biotech’s that got a boost from the JPMorgan Healthcare Conference this year are where to go. Others are just trying to see what is next.

One place not to go may well be Pfizer. As noted on Motley Fool there are many reasons. One of the most important I feel is the question of the drug pipeline. In the case of Pfizer there really isn’t one. In fact they are running into the problem that is deadly to many successful biotech stocks, patent expiration. Without the protection of a patent, sales inevitably fall precipitously, no matter how big your company is or the nature of the drug.

For Pfizer they will be losing 2 of the biggest drugs in the last 15 years. In fact the most explosive and popular drug in perhaps 2 decades or more will be opening up to generic competition, namely Viagra [the other drug is Lipitor]. If anyone thinks that won’t kick the company in the seat of the pants, then you probably think gold is a sell right now.

Of course Pfizer is not alone, as Genentech is in a similar situation. Though they do have a few new innovations on their aging pipeline that may give them a small boost, or at least cushion the patent exiration blow. So where do you look instead.

Well Adam Feuerstein over at TheStreet.com (I read a lot of the information there too) posed a new outlook that may catch on, if it hasn’t already. His theory basically is that many feel the top names at the JPMorgan conference are the top picks for the year. To that end he is following them.

He’s selected a list of 10 names, some well known others not, that he will watch throughout the year. They are:

It’s an interesting group. Again the key is always the pipeline. To me that is the beginning and end of any choice of biotech stocks. Strong, growing pipelines are of interest. Lagging pipelines are not.

Will this list prove to be true? Are they a one shot deal? We will see, but the short term of one year is never enough to know. I will tell you one thing though; no matter which biotech’s lead the industry, and whether the industry leads the stock market, as fear of recession and the impact of the mortgage crisis continues to unfold, this will not be the last you hear about this.

Labels: Adam Feuerstein, Biogen Idec, drug pipeline, Genentech, Idenix Pharmaceuticals, Incyte, Isis Pharmaceuticals, JPMorgan Healthcare Conference, Motley Fool, Pfizer, Seattle Genetics, stock market investors, Viagra