Europe: The news will be light

The public markets in Europe look to be volatile through the end of the year, but biotech investors have not simply fled to profitable or revenue-generating companies, as have generalist investors. Instead, the specialists have taken a blended approach of both defensive investing in profitable and late-stage companies and stock-picking on low valuations. The problem for Europe is that there are few milestones for investors to hang their hats on this quarter, leaving them to focus on long-term fundamentals.

"We've seen defensive investing on the part of generalists with concerns over oil prices, terrorist attacks and Iraq," said Gareth Powell, healthcare fund manager at Framlington Investment Managers. With generalists out of the picture, the specialists have had pretty much of an open field. Specialists have been "picking up stocks, because they were looking very cheap, especially when the NBI was below 650 in late July and August," said Powell, referring to the NASDAQ Biotech Index.

The European sector had a relatively quiet third quarter, with the BioCentury London Index gaining 1%, while the BioCentury Europe Index lost 1%. Both remain up on the year: 16% for the London group

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