Motley Fool: Why I Still Like Biotech

Back in March, I was upbeat about investing in the biotech sector, and I still am now. Consider these facts:

the big pharma companies are being hit by widespread patent expiries. Drugs which achieved sales of close to $20bn (£10.6bn) in 2005 are coming off patent this year. Big pharma needs lots of new drugs to replace the patent expiries.back in 1993, fewer than 10% of newly approved drugs in the US came from the biotech sector. That figure should rise to 60% in 2006 according to BBBiotech, a biotech investment company.biotech has been able to achieve better terms in its partnership deals with the big pharmas. Amgen (Nasdaq: AMGN), for example, out-licensed anaemia drug, Procrit, in 1987 for an 11% royalty in the US. In 2002, OSI Pharmaceuticals (Nasdaq: OSIP) out-licensed eye drug, Macugen, for a 50% US royalty!

That 50% figure is exceptionally high but it does underline the trend towards higher royalties for biotech companies….

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