Biotechnology companies produce some products that are increasingly interesting these days: bio-warfare detection systems, smallpox vaccines and blood technologies, to name a few.
But apparently, that's not enough for the biotech sector to escape the economic plunge following the terrorist attacks on Sept. 11.
One factor is that such businesses make up a tiny percentage of the sector, and that isn't enough to buoy it.
In some cases renewed interest in products to combat bio-warfare isn't even enough to buoy the companies that make them.
"The detection of chemical (or biological) agents is a miniscule portion of their revenue, so that really hasn’t impacted them," said Rob Olan, a biotech analyst at J.P. Morgan H&Q.
A couple of companies, however, did see a big jump in their stock price when the markets reopened on Monday. InVision Technologies (INVN), which makes security devices and is researching chemical and biological warfare detection systems, saw its shares jump 165 percent that day.
Bruker Daltonics (BDAL), a company with a contract with the Department of Defense to make technologies that detect biological and chemical agents, saw an 18 percent surge in its price, and ended the day up by more than 3 percent.
But most biotech companies have suffered with the rest of the market sectors.
Companies that provide research products to the pharmaceutical and biotech companies, like gene chip company Affymetrix (AFFX) and equipment maker Applied Biosystems (ABI), weren't able to make shipments last week because of the ground traffic slowdown and the air traffic halt.
"For most companies those are important weeks because they are the last weeks in the September quarter and the two other months of the quarter are seasonally quiet," Olan said.
In some cases, 40 to 50 percent of the quarterly business happens during September, he said.
Many conferences and investor meetings that usually give the sector a boost in the final quarter of the year have been cancelled or postponed.
But even these companies won't see a significant change in their finances, Olan said.
"Fundamentally, there's been no change in business, so you're not going to have earnings revisions," he said.
Although biotech is suffering from a lack of investor confidence in the economy like all other sectors, its "report card has never been better," said G. Steven Burrill, CEO of Burrill & Company, a private merchant bank that focuses on biotech, in an interview with the Biotechnology Industry Organization.
"The $32 billion in financing that the industry did in 2000 combined with the $8 billion that the industry raised this year has endowed our industry with a cash capital base that it has never before had," he said. "By and large the companies are (relatively speaking) well financed, well managed, (and) well into their product development realities."
Plus, Olan said, people might forego a new refrigerator or car in times like this, but they will still spend what's necessary to maintain their health, putting higher-cap companies like Amgen (AMGN) in a good position.
Investing in biotech and pharmaceuticals has always been risky, he added. Research is expensive and payoffs can be huge, but it can take a decade -- something that definitely hasn't changed.
