Fresh bubble or new dawn for the biotech sector?

BIOTECH

Shares in biotech firms have surged in the last two years amid a jump in listings, but should investors tread carefully from here?

Fears are mounting that the sector could be in the middle of a bubble in the US, where permissive Food and Drug Administration (FDA) regulation has accelerated the development of innovative drugs. The NASDAQ Biotechnology index delivered more than double the returns of the S&P 500 during 2013, returning 61% compared to a 26% rise in the S&P 500. Last year also saw a large number of IPOs in the biotech sector as new firms looked to break into the market. Almost 40 IPOs took place, raising some $3bn, the second-highest volume of annual IPOs in the 30-year history of biotech. This rap...