Hambrecht & Quist
18th Annual Healthcare Conference

On the road for Info.Resource, publisher of Oregon-Bioscience.com

1999. It was a very good year.

By Lorraine Ruff and David Gabrilska, Partners
Milestones, the critical thinking company
Seattle, WA

"It was a year in which stocks moved more in a week than they did in a year…" according to Todd Bakar, director of equity research, Chase Hambrecht & Quist…."everything was condensed into "Internet time."

Instead of day traders, we may well become moment traders with the stomach to walk calmly on deck during rigorous corrections. At a time when there's no time to read, it is a game for those who can factor trends into investment decisions, and then double down, including the biotechnology sector.

The last event of the last day at Chase Hambrecht & Quist includes the sell-analysts' collective top picks. For purposes of the Chase Hambrecht & Quist 18th Annual Healthcare Conference that ended last week in San Francisco. We've selected two sectors:

...the focus is on process and automation...

Healthcare Internet/B2B (business to business) eHealth companies According to Stephen Fitzgibbons, healthcare Internet analyst, he's looking for continued momentum in the eHealth sector.

Just a year old, this new "space" on Wall Street accounted for 20 newly public eHealth companies. "Consolidation is already occurring as," according to Fitzgibbons, "companies use their powerful currencies to build critical mass."

With just 12 months performance, the index for CH&Q's eHealth companies up 226 percent.

Fitzgibbons stated that from his perspective there are a number of very clean evolutionary steps that are defining this new space:

There's the Internet development stage (Winter 1996) in which content was king. Good examples of this phase were hospital web pages and www.DrKoop.com.

"That was followed by the commerce stage (1999) in which most of the activity was business to consumer.

"2000 will be the B2B (business-to-business) stage where the focus in on process and automation," adding that in a very few years the distinction between the "clicks" and "mortar" (Internet vs. traditional) companies will cease to exist. The Internet tools will have been integrated.

B2B eCommerce is "white hot," adding that he expects exciting investment opportunities in B2B medical products, healthcare services and insurance and benefits. "In our opinion, B2B exchanges will streamline supply chains across the economy, creating enormous value for early investors," he reported.

"Someone compared me to Stuart in the AmeriTrade commercial," he said. "I have to admit, we've lit the candle."

eHealth top pick: SciQuest.com Inc. (SQST) $71.00 BUY

Biotechnology companies

The biotechnology sector has been strong for two years. In 1998, it was driven by excellent performance among top tier companies, including Amgen, Genentech, IDEC and Immunex, and new drug introductions. The rich get richer. 

In 1999, growth and performance in the top tier lit a fire under speculative investors who, in turn and with the help of nearly a media glut in genomics-related stories, drove the sector to new heights. Comparatively, nearly everyone's boat was floated.

"Data is king and winners in this sector will be those who generate, interpret and apply it," said Rob Olan, life science technology analyst. Through acquisition Perkin Elmer has built a uniquely broad set of data tools and a roster of divisional players such as PE Applied Biosystems and its newest addition, PE Celera.

These are companies who are literally creating before our eyes the tools with which we will interpret and apply the plethora of information of the genomics revolution.

"This is the year when there's been a shift in the balance of power, when the basis for drug development has shifted from chemistry to biology and genomics," said Richard van den Broek, CFA, managing director and biotechnology analyst.

Biotechnology top picks:

Incyte Pharmaceuticals (INCY, $89.66, BUY)
Gilead Sciences (GILD, $56.31, BUY)

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