BOSTON (Reuters) - Research and investment into brain-related illnesses is growing at an unprecedented rate as scientific advances coincide with the demands of an aging baby-boom population determined to beat the odds.
Now, investors looking to place bets on this fast-growing but highly specialized sector can.
Nasdaq Stock Market Inc is poised to launch an index made up of companies whose primary focus is the development of drugs, devices and diagnostics to treat neurological disorders, including Alzheimer's disease, Parkinson's disease and schizophrenia.
It is one of the first indexes ever to focus on a specific disease category, and Nasdaq expects it to interest several types of investors, from individuals touched by a particular disorder to those seeking to minimize the risk of stock-picking in a complicated industry.
"This index will be the defining metric for performance of companies in this very important segment of the health field," said Steven Bloom, senior vice president, Nasdaq Financial Products.
The index, to be called the Nasdaq NeuroInsights Neurotech Index, will launch on September 25 and has been created in conjunction with NeuroInsights, a research firm that monitors and analyzes trends in the neurotechnology field.
Companies in the 32-member index include drug makers such as Biogen Idec, which makes the multiple sclerosis drugs Avonex and Tysabri; device makers such as Northstar Neuroscience, which makes brain stimulation devices to help treat stroke and depression; and diagnostic companies such as Natus Medical. Together, they have a combined market value of more than $71 billion.
...To qualify for inclusion in the index, a company must be a "pure play" neurology company, deriving some 50 percent or more of its revenue from treatments for central nervous system disorders, or devoting 50 percent or more of its research and development dollars to the field.
According to a report by NeuroInsights, global sales of pharmaceuticals for neurological disorders grew 8.5 percent to $101 billion in 2006, compared to a 7 percent growth rate for the overall pharmaceuticals market.
And Zack Lynch, co-author of the report, said venture capitalists are plowing money into the field, with investment rising 7.5 percent in 2006 to $1.67 billion.
"The aging of the baby-boom generation is creating a substantial market opportunity," he said.