The biotechnology sector has come under significant pressure lately. For the last five years, the sector has generated strong returns. However, investors have been concerned about a potential
bubble in the sector.
Indeed, concerns about a bubble in the biotech sector began last year. In the first few months of 2014, the iShares NASDAQ Biotechnology (ETF) (NASDAQ:IBB) came under significant selling
pressure. However, the selloff did not last long as investors looked at the pullback as a buying opportunity.
The biotech sector not only rebounded following the sell-off in early 2014 but even rose to new highs. The second selloff in the biotech sector began in August this year and was worsened after Democratic Presidential candidate Hillary Clinton tweeted about biotech companies’ pricing strategy.
Since the Clinton tweet, the sector has come under heavy selling pressure. Although year-to-date, the IBB is still up nearly 6%, its performance in the last three months has been disappointing. The IBB is down more than 13% in the last three months.
The question is whether the sector will rebound or is this a long-term trend. Deutsche Bank analyst David Bianco expects the healthcare sector, which includes biotech stocks, to bounce back sharply before the end of this year.
The rebound in the biotech sector could provide a boost to Plandai Biotechnology Inc. (OTCQB:PLPL). This morning, PLPL announced that it has executed an Exclusive Distribution Agreement with Bal Pharma Ltd., an India-based manufacturer and exporter of pharmaceutical finished formulation/bulk drugs. Bal Pharma is also a distributor of nutraceuticals ingredients.
As per the terms of the agreement between the two companies, Bal Pharma will use PLPL’s Phytofare(R) in their finished formulation products while also distributing Phytofare as an active ingredient throughout India.
Commenting on the development, Callum Cottrell-Duffield, Vice President of Sales at Plandai, said that Bal Pharma is one of the leading pharmaceutical companies operating in both the Indian and the international market and PLPL is excited to partner with them to bring Phytocare to the region.
Cottrell-Duffield further said that with Bal Pharma’s proven track record as the manufacturer, exporter and distributor of pharmaceutical finished formulation/bulk drugs, it should quickly be able to generate substantial market penetration for PLPL. He added that the agreement with such a highly-regarded Indian company further validates the 15 years of research that has gone into bringing Phytofare to the market.
This might turn out to be a game changer for the Company, or the news could quickly fizzle in investors minds. One thing is certain; the last two years have been really rough on the Company’s share price with shares stuck in a long term downtrend. Even with the increased volume today, shares are practically even on the day, so while an important release, it may not be enough to turn the Company’s share price around.
