Scrip Pharma and Biotech Stock Tracker - October 2008

In Scrip's Stock Tracker for October, US reporter Christopher Spillane reviews the impact of recent political intervention and global turmoil on both the capital markets in general and the 15 biopharmaceuticals stocks followed in this monthly feature.

During the previous month, government-backed financial packages were patched together in an ambitious attempt to prevent the financial crisis becoming a global economic emergency. The fiscal stimulus sought to calm nervous financial institutions. Despite this, and as usual, October was a cruel month in the markets, and it emerged that the protectionism was not sufficient.

By mid-October, the UK government committed an additional £400 billion into rescuing the banking system. Iceland had debts five times its gross domestic product (GDP), and central banks across the world slashed interest rates in a co-ordinated attempt to stave off a severe global recession.

With the continuing struggle, the major indices spiralled wildly and in a highly volatile manner. The Dow Jones Industrial Average ended the month trading at levels rivalling the Great Depression (down by 14% to 9,325.01). At one stage the index fell to a year to date low of 8,175.77.

The FTSE Eurofirst 300 endured similar losses, falling by 13.5% to 928.81, while the S&P500 performed badly, declining below the psychologically important 10,000 level for the first time since September 2003. In volatile intra-month trading, the index had its biggest gain for over 50 years on one day, followed the next day by a level of crash last seen in 1987.

Short-dated government bonds and cash were seen as the only safe options left to investors. Estimates in the Wall Street Journal for full-year 2009 operating earnings per share (EPS) are $97.31 for those in the S&P500, down from predictions of $103.85 in September and $108.77 in June.

Against a background of developed economies reporting that GDP had shrunk in the third quarter and the financial pages awash with graphs showing the familiar slide of the indices, what was October like for the biopharmaceutical industry?

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