According to an article on GrowthStockWire.com by Larsen Kusick, the lead analyst for the exclusive Phase 1 Investor advisory, the biotech sector is on its way up. He cited Roche's $5.8 billion bid to buy Illumina, Bristol-Myers' $2.5 billion offer for Inhibitex, and Amgen's $1.2 billion bid for Micromet as "part of a larger trend that's propelling the whole biotech sector to new highs. And it's just getting started."
Kusick pointed out that while "Big Pharma companies have tons of cash...these companies aren't growing." The average sales growth this year for companies like Johnson & Johnson, Pfizer, Amgen, Merck, Roche and others is negative 0.6%. These companies are "losing billions of dollars in revenue as blockbuster drugs, like Lipitor, go off patent and have to compete with cheaper generic versions. Big Pharma executives realize the only way to boost revenue growth, while earning a reasonable return on their investment, is to buy biotech assets at distressed prices."
He predicted that "a growing buyout bonanza would put a solid bid beneath biotech stock prices. The sector is already rocketing off its 2011 lows." The chart below illustrates his point:
He concluded, "if Big Pharma puts more of its cash to work this year, the uptrends here are just the beginning."