Bullish Biotech a Boon to Health Sector Investors

As the co-founder of Opus Point Partners, Lindsay Rosenwald, MD, devotes his considerable expertise as a physician and entrepreneur to managing one of Wall Street's top biotechnology-focused investment funds. Top investors like Lindsay Rosenwald have taken serious notice of the very bullish biotechnology sector this year.

A number of biotechnology acquisitions have been announced in the past few months, including:

- Valeant Pharmaceuticals International agreed to buy Bausch + Lomb for $8.7 billion, greatly expanding Valeant's eye care business.

- Actavis Inc., which manufactures generic drugs, announced the purchase of Warner Chilcott in an $8.5 billion transaction.

- Thermo Fisher Scientific, a maker of scientific instruments, acquired another instrument manufacturer, Life Technologies, for $13.6 billion.

- Amgen announced a deal worth $10.4 billion to buy Onyx and its line of cancer treatments.

Typically, a buyout forces the purchasing company's stock price to drop and the acquired company's price to spike. In recent biotech acquisitions, however, both parties' stock prices have risen, suggesting strong investor confidence in the sector. This attitude is further reflected in the recent positive performance of many biotechnology exchange traded funds (ETFs), which track along with sector-wide trends.

Many analysts believe this positive trend will continue as large firms seek to buy out small, agile companies with innovative new products. Given the aging trends in the populations of developed nations, investing in life sciences today would appear to be a good bet for the long term.

Biotechs Experience Success after Initial Public Offering

The co-founder of the New York City asset management firm Opus Point Partners, Lindsay Rosenwald has built a career around biotechnology investment. Since the 1980s, Lindsay Rosenwald has identified investment opportunities in the medical sector, having served as one of Wall Street's first physician analysts.

As of July 2013, 16 biotechnology companies have gone public this year, with more than half a dozen companies completing initial public offerings in June alone. Share prices for these firms are now at an average of 48 percent higher than their offering prices. This jump is due in part to Onyx Pharmaceuticals' recent refusal of a $120 per share buyout offer from international giant Amgen. Onyx's demand for a higher price launched a wave of stock increases for biotechs across the country. In mid-July, the New York Times reported that "four of the top 10 performing companies on the Nasdaq year-to-date were biotechs."

In addition, larger companies have acquired venture-capital-backed biotechs. In the second quarter alone, industry leaders bought out five such firms. Moreover, pharmaceutical companies often target small biotechs as licensing partners, saving themselves the upfront investment in research and development.