Drilling down deeper

For the past two years, investors have made great returns in the top tier biotechs, driving them up 79 percent in 1998 and 53 percent in 1999. Now the rotation into companies with real products, real earnings and significant market capitalization is pretty much complete, as many investors agree that the big cap biotechs are just about fully valued.

Thus while the big cap biotech names remain must-haves in any health care portfolio, investors last year were already starting to look down into the tier two companies valued between $501 million and $1 billion. Those companies were up 102 percent last year, and it looks like investors will spend much of this year looking for their big gains by prospecting among the middle tier of companies that will form the next generation of top tier companies, as well as on down into the lower tiers for potential winners...