Aussie Biotechs

  1. 4,086 Posts.
    G'day All,

    I just found the following article, published by UPI yesterday. Very upbeat about a selected range of Aussie biotechs.

    I have (of course) taken the liberty of highlighted a specific mention.

    If you want to see the original article it is at

    Feature: Australia expands bio-tech role
    By Stephen Sheldon
    UPI Business Correspondent
    From the Business & Economics Desk
    Published 9/25/2002 4:24 PM
    View printer-friendly version

    SYDNEY, Australia, Sept. 25 (UPI) -- You'd be hard pressed to call snoring a sexy topic, unless of course you invested in Australian healthcare company ResMed.

    ResMed makes a range of devices to diagnose and treat sleep-disordered breathing -- a condition that sounds like extreme snoring, leaves the sufferer fatigued and puts their heart under stress.

    Although its share price is well off the boom-time highs of last October, ResMed is posting the kind of profits that make chief executives look forward to facing shareholders at their annual general meeting.

    Since its public listing in 1995, ResMed has had 27 consecutive quarters of record growth in terms of meeting and/or beating the earnings estimates compiled by global market research house, Thomson First Call.

    Put another way, it's turning zzzz into $$$$.

    Although its research, development and manufacturing occurs in Sydney, its headquarters are in San Diego, Calif. So it has been on numerous U.S. lists: it made Forbes' list of 200 Best Small Companies in America for five consecutive years, was one of Business Week's Hundred Hot Growth Companies in 1999, 2000 and 2001, and was named by Fortune magazine as one of America's One Hundred Fastest Growing Companies in 1999, 2000 and 2001.

    Investor's Business Daily named ResMed as the top performing medical company in the medical products category in the U.S. for the year 2000.

    Recently, ResMed announced record revenues and net income for the financial year ended June 30. Little wonder most analysts have a "buy" on the stock.

    According to Chris Roberts, executive vice president and head of European operations, the company believes it has only just begun.

    "I like to say we're tying up our shoelaces for the start of the marathon," he told United Press International.

    That's because one in 10 adults has the conditions that ResMed products can cure, but only 5 percent of them have been diagnosed and treated.

    ResMed has 35 percent of the U.S. market, where it is second behind Respironics. In Europe and the Asia-Pacific, it is number one.

    Roberts attributes much of ResMed's success to an understanding of the technology from the boardroom down.

    "We've always believed that innovation is the turbo charger of the company, so we're run by engineers and technologists, not lawyers and accountants. It took us five years to employ our first accountant."

    Just up the road from ResMed, in Australia's mini-version of Silicon Valley on Sydney's north shore, is another Aussie success story, Cochlear, which makes and markets Nucleus cochlear ear implants for the hearing-impaired.

    In 1985, Cochlear was the first cochlear implant system to gain U.S. Food and Drug Administration clearance in the United States for use by adults. Today more than 40,000 adults and children are implanted with a Nucleus cochlear implant. It's the market leader in its field, with a 60 percent to 65 percent global market share.

    Earlier this year, the company's main rival -- Advanced Bionics Corp. of the United States -- temporarily withdrew its implant from the market due to an increased risk of patients contracting meningitis.

    In August, Cochlear announced a 29 percent jump in full-year profit. It said it believes sales will grow 15 percent to 20 percent annually over the long term.

    Even after the global stock market collapse, Cochlear is still trading at a price/earnings ratio approaching 50, such is the market's faith in the company.

    Cochlear and ResMed share a common link: a far-sighted chap called Paul Trainor who kick-started Australia's medical device industry when he began two seminal companies, Nucleus (now Cochlear) and Telectronics, in the 1960s.

    For the first time, highly trained graduates no longer had to travel overseas to work. That helped stem the brain drain that had seen some of Australia's top scientific talent and research go overseas, usually to the U.S.

    Trainor's companies trained thousands of people, including ResMed's Chris Roberts, in all aspects of research, development and marketing, which spurred the growth of many other companies.

    But no story about Australia's health care sector is complete without biopharmaceutical company CSL, the largest entity on the biotech index.

    CSL was once a government body called Commonwealth Serum Laboratories, which quietly made and marketed vaccines, and split blood plasma into many products (a process called fractionation). Privatized in 1994, it is now one of the world's five biggest companies involved in fractionation.

    Like ResMed and Cochlear, CSL has stretched itself globally, and most of its sales are outside Australia.

    In 2000, it rocketed onto the world stage when it bought the plasma fractionation business of the Swiss Red Cross-associated group ZLB.

    It then acquired NASDAQ-listed Nabi, the largest independent source of plasma supply in the United States.

    CSL has an agreement with the American Red Cross to co-develop a sealant bandage that may be able to stop traumatic bleeding almost immediately. The bandage could revolutionize the treatment of hemorrhage.

    In 2002 it announced another record profit: a 58 percent year-on-year rise in net profit after tax.

    Today its shares look like good value at around $10, although that's down from the $22 reached before the biotech wreck.

    Finding the next ResMed or the CSL is no easy task. "Investing in these companies carries higher risk than normal," Scott Marshall, head of research at Shaw Stockbroking, told UPI.

    "I know what they're doing, but not their competitors." But he says there are a host of Australian firms to keep an eye on.

    One that his firm singles out is Cellestis, which went public in 2001. Its most advanced product is a tuberculosis detection test that promises to be significantly more reliable than the century-old Mantoux Scratch Test.

    About 40 million TB tests are given annually in the developed world alone, so growth potential is there. The technology also applies to the diagnosis of diabetes, legionnaires disease, Lyme disease and Crohn's disease.

    There's also Prana Biotechnology, which -- together with United States-based Forest Laboratories -- is holding trials of a drug to combat the effects of Alzheimer's disease.

    Also worth looking at is Polartechnics, which develops and makes equipment to detect cancers and pre-cancerous conditions. Its TruScan technology is tipped to replace the Pap smear test.

    Dermatologist Dr. Scott Menzies, of the Melanoma Unit at Sydney's Royal Prince Alfred Hospital, told UPI that the recently released SolarScan represented a major advance in the monitoring and diagnosis of deadly melanomas.

    Then there's Solbec, which appears to have a platform technology to directly attack a range of cancers, and Peptech, which is doing trials for a rheumatoid arthritis drug.

    These companies are not only changing the image of Australia away from quarry and wool-grower to modern high-tech economy; they are also giving baby boomers some hope they will achieve immortality.

    Or, at the very least, the chance of a good night's sleep.

    Copyright © 2002 United Press International

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