In a recent discussion, I used the phrase “biotech wilderness periods” to describe the times of investor malaise around the sector, which result in its stock indices remaining range-bound. When I joined the fund management industry in the summer of 2000, it was just in time for a broad and lasting market sell-off that included biotech. The NASDAQ Biotech Index (NBI) had already started the retrenchment from its February 2000 high that was reached after publication of the first complete human genome DNA sequence drove hopes of a new era of drug development.
Since its inception in November 1993 the NBI has generated more than twice the return of the broad S&P500 index (SPX), but it has been much more volatile. That retrenchment from 2000 took almost 30 months to reach its low, falling by 70% compared with the SPX’s fall by 36% over the same period