Local biomed companies' shares perform poorly on Wall Street.

L.A. County-based biomed companies turned in an anemic performance on Wall Street last year, even as the major stock indices reaches record highs.

Share prices for six of L.A.'s eight largest publicly traded biomed companies dropped in 1996, in sharp contrast to a 26 percent jump in the Dow Jones Industrial Average and a 22.7 percent gain in the broader S&P 500 index.

Analysts attributed the poor performance to general weakness among health care stocks nationwide, touched off early last year by disappointing earnings from a few high-profile health care companies.

They also pointed out that the second half of 1996 generally was a rough time for smaller-cap companies, which describes most of L.A.'s biomed firms. Investors tended to favor blue chips due to concerns that an economic slowdown could dampen the growth of smaller companies.

As evidence of the tough times facing the industry, not one of the 34 L.A. County companies making initial public offerings in 1996 was a biomed firm, and only one of the 34 - Cohr Inc, of L.A. - was a health care company.

"Small medical health care companies have been under a lot of pressure since the middle of last year. It was a group that was really hot before then, so you could say that prices were way out of line," said William Gibson, an analyst in the Santa Barbara office of brokerage Cruttenden Roth Inc.

Gibson pointed out that biomed stocks have been cyclical in recent years, dating back to when President Clinton first attempted to reform the national health care system in 1992.

"When Clinton was going to reform health care, (biomed) stocks tanked. Then they had a big run after health care reform fell through," he said, which set the stage for last year's downward cycle when several companies turned in their disaapointing earnings.

In fact, most of the nation's biomed indices lagged well behind the more broad-based indices in 1996.

The American Stock Exchange Biotech Index was up only 6.6 percent on the year, the Russell 2000 Health Care index was down 5.5 percent and the Chicago Board of Exchange Biotech Index was down 5.9 percent.

"For some high-profile companies, particularly in the HMO arena where there was a lot of competition, earnings disappointments were responsible for (touching off) last year's" poor performance in biomed company share prices, said Gibson.

One of L.A.'s few biomed standouts last [TABULAR DATA OMITTED] year was MiniMed Technologies, a Sylmar-based maker of insulin pumps. Mini-Med's share price rose 148 percent in 1996, jumping from $12.50 in January to $31 by year end.

MiniMed's meteoric rise was fueled by the company's strong financial performance in 1996 - the first year it was profitable in all four quarters. Fourth-quarter results had not been released as of last week, but company CFO Kevin Sayer said the quarter's bottom line would be positive.

L.A. County's only other major biomed stock to rise in 1996 was Staar Surgical Co. of Monrovia. Staar, which makes medical products for use in cataract surgery, started out 1996 at $10.75 per share and finished the year at $13.25.

For most of L.A.'s other publicly traded biomed firms stock prices declined last year.

They included: Amgen Inc. in Thousand Oaks (down 7.2 percent), Chad Therapeutic Inc. in Chatsworth (down 8 percent), Compumed in Manhattan Beach (down 76.5 percent), Diagnostic Products Corp. in L.A. (down 31.7 percent), HemaCare Corp. in Sherman Oaks (down 21.7 percent), and Lee Pharmaceuticals in South El Monte (down 54.2 percent).

"Overall, the micro and small-cap stocks did a lot poorer than the Dow Jones last year," said Bill Roberts, president of CTC Inc., an investor relations firm in Cincinnati.

"Investors were looking for a safe haven, and biomeds tend to be smaller (and more volatile) companies," be said.

The blue-chip dominated Morgan Stanley Health Care Products index posted a 16.9 percent gain last year, in stark contrast to the weak performance of other biomed-oriented indices.

While the Russell, AMEX and CBOE biomed indices are all dominated by smaller-cap firms, the Morgan Stanley Health Care index contains such blue-chip stalwarts as Abbott Laboratories, Bristol-Myers Squibb Co., Merck & Co. and Johnson & Johnson.

Despite the relatively poor performance last year, the prognosis for 1997 is much improved, according to Gibson. He said many small-cap biomed stocks hit bottom last November and look poised for a comeback this year.

Roberts agreed, explaining that blue-chip stocks are relatively high priced at the moment, whereas small-cap biomed stocks are a relative bargain.

"In biomed, stock prices have been pushed down considerably. With Dow stocks now fully valued, (smaller-cap biomed stocks are) a value play" that should attract investors to biomed stocks in 1997, he said.