Biotech's Winners and Losers for '08

It's time to peek ahead at biotech stocks in 2008. To kick it off, let's examine three macro issues that could affect the entire sector.

The presidential election: The looming November presidential election might weigh particularly heavy on drug and biotech stocks, given that health care is expected to be a front-burner issue.

Don't expect investors to react with much enthusiasm if presidential candidates start calling for price caps or other control measures to curb the rising cost of prescription drugs. Government intervention into drug pricing and/or significant changes proposed to the new Medicare prescription drug benefit could keep a lid on future growth rates of drug and biotech stocks.

Biotech investors need to also keep a close watch on legislative efforts to create a new regulatory path in the United States for so-called bio-generic or bio-similar drugs. Unlike their Big Pharma brethren, biotech companies have never had to face the considerable challenge of low-cost generic competition. That might change with a new face in the White House.

The Food and Drug Administration: Is anyone happy with the FDA these days? On one side, drug-safety watchdogs are accusing regulators of being too cozy with industry and approving drugs with sketchy safety profiles.

On the other side, patient advocacy groups are knocking the FDA for not approving enough drugs, especially those for life-threatening diseases like cancer. Some of these folks also accuse the FDA of collusion with industry to keep certain drugs off the market so that existing drugs won't face competition.