Guide To Investing In Biotechnology Companies

Core technology in biotechnology companies is more important than a product, according to Mark Lampert, whose Biotechnology Value Fund has shown amazing profits when others have not. The first wave of biotechnology companies such as Amgen, Genentech and Chiron were successful because their products did not face a drug discovery risk but rather a manufacturing risk, he told Barron's magazine.

Those successes allowed the industry to raise huge sums on Wall Street but disenchantment set in after later products began to fail in clinical trials. Mr Lampert feels that Alza, with its many alliances based on its technologies, is the best model for the biotechnology industry.

His strategy is to invest almost exclusively in companies that have partnerships, so the partner pays for most of the development; this allows for high return on investment, even though company profits are based on royalties only. The fact that a major drug company is willing to partner with a biotechnology company helps him select companies in which to invest, added Mr Lampert.