Pharmaceutical Companies – How much do you know ?
Saw some comments in channel news asia’s stock forum about Biosensors’ lost making report. Something like : this is a loss making company, this involve in lawsuit, loss is widen in the latest quarter, blah blah blah, so conclusion is AVOID.
Interesting enough, how much they know about this company or rather this field?
I have no knowledge on this as well, but got a bit of experience working with University of Washington, Seattle’s bioscience department to commercialize a product as school project, had visited different pharma / biotech companies in Palo Alto area, had visited and talked to a few venture capitalists who specialize in biotech industry in bay area.
My comment is :
- Lawsuit is common in such industry
– pharma companies making loss while stock price continue to climb to an unreasonable number is normal
Why say so? First, all of them are doing R&D and make them into Intellectual Property continuously, there will be great chance for these work to be similar or overlap with each other. To protect own interest, everyone will take any similarity seriously. So lawsuit is common.
Second, pharma companies are high risk and high reward investment. People buy on EXPECTATION, not the current earning. Imagine for a drug to pass FDA, it need at least 15 years of clinical trial, how can such company has decent earning during this 15 years? But once the blockbuster pass the trial, for example Vigra, the earning is huge. In Palo Alto, lots of companies call themselves startups, although they already public listed companies. So if loss making in pharma industry means the company’s stock should be avoid, there won’t have much choice left. In such industry, it is ok to have loss for 20 years but a blockbuster on the 21th year. So within this 20 years, people buy on the expectation that on 21th year, they can complete their technical trial and launch the product.
Biosensors doing medical devices(not drugs), which will require far less clinical trial period, and i think it still cannot be considered as a killer device also.
I’m not sure how Biosensors will perform, but the device looks good to me at the moment. Don’t know when will I offload my portion, if I want to sell, it definately won’t be a cut loss situation. Biosensors still in startup phase, or pre-IPO phase, uncertainty is there, but great reward is there too.
