For instance, self-styled specialty pharma aaiPharma Inc. is now included in the Index. So are generic drug makers Able Laboratories Inc., Eon Labs Inc. and Impax Laboratories Inc. Other pharmas include American Pharmaceutical Partners Inc., Axcan Pharma Inc. and First Horizon Pharmaceutical Corp. Plus, specialty pharmacy and distribution company Priority Healthcare Corp. made the new list as did Perrigo Co., which makes OTC drugs as well as nutritional products. Biological product manufacturer and distributor Techne Corp. is there, too, as well as contract research organization SFBC International Inc. (Click here to view the entire list.)

Nasdaq instigated these sweeping changes so it could reclassify its companies according to the FTSE Global Classification System – in fact, Nasdaq is reclassifying all its listed companies (about 3,400 individual stocks) in all Nasdaq indices according to FTSE. Reportedly, exchanges and investment firms in Europe, Africa and Asia have already switched to FTSE’s classification system – which simplifies the analyses of individual stocks as well as business sectors on a worldwide basis.

Thus, any company added to the new Biotech Index must be classified according to FTSE as either biotech or pharmaceutical. Moreover, listed companies must have a market capitalization of at least $200 million and an average daily trading volume of at least 100,000 shares. Those firms that were already on the list before the re-ranking – and almost all of them are biotechs – have lower criteria: They must have market caps of $100 million and an average daily trading volume of 50,000 shares.
Peppering the Biotech Index with drug stocks might be the right move for Nasdaq to make in its efforts to achieve a global presence, but one wonders how useful this new Index will be in tracking the performance of biotechnology stocks per se – securities that are now being thrown together with stocks of manufacturers of generic drugs and nutritional products.