US Biotechnology Sector Freezes After Bull Run

The run-up in interest rates and the melt-down in sundry computer-related shares, which has quashed investors' appetites for growth stocks of all types, are the prime reasons for the freeze that has hit the once-hot biotechnology group in the USA, according to financial markets magazine, Barron's.

The market has choked, adds the magazine, on a recent glut of new biotechnology issues, including some initial offerings of predictably dubious quality. A general exodus of momentum investors, along with quarter-end window dressing, has prolonged the agony, it was added, so that many issues and their holders are in need of a cure.

Though the sector has underperformed all but three of the 96 groups tracked by Barron's, with much of the damage concentrated in the last few weeks, the current rout does not resemble either in course or severity the bear market of 1992-94, when panic over health care reform and a rash of high-profile product failures led to a shutting of the financial window.