Changing Market Evaluation of Biotechnology Firms

Abstract

The stock market's valuation of selected public firms within the biotechnology industry has been analyzed to measure the performance of specific companies within a subset of the industry and the performance of this subset of the biotechnology industry within a larger universe of publicly traded companies. The objective of the study was to analyze the performance of the individual firm into components attributable to 1) the overall performance of the econony; 2) the industry performance compared with other industries; and 3) the specific performance of the individual companies compared with other firms within the industry. The method of analysis is independent of conventional profit-and-loss approaches. The stock market alone is used for the evaluations. The changes in market value are the sum of the three components adjusted for the size of the firm.