ResMed targets devices to help patients with sleep apnoea. It's a growing problem, with 12 million diagnosed sufferers in the US - let alone the many millions more who aren't yet diagnosed - and represents a huge opportunity for companies that can help manage the condition.
Shares in ResMed plunged after it revealed a clinical trial of one of the new treatments it has been testing increased patients' chances of dying, which is a less than desirable state of affairs for a health company.
The company revealed that when patients used its SERVE-HF sleep therapy - which treats patients with both sleep apnoea and heart failure - their chance of dying increased by 10 per cent. Left untreated their risk of death increased by only 7 per cent.
Market reaction was swift and brutal.
Shares fell 18 per cent and an analyst at broker Wilson HTM immediately cut his recommendation on the stock from buy to sell, without the usual stop at neutral or hold along the way.
But demonstrating just how hard it is to assess the prospects of biotech companies, another analyst at UBS kept his buy recommendation on the stock.
Meanwhile, Sirtex shareholders can be happy with last week's share price rise to around A$28.50, but the shares are still below the closing high of A$39.15 they hit a couple of months ago.
The shares plunged by more than half from that high after the company revealed that trials of one of its treatments had failed to extend the lives of patients.
Following last week's rebound, the company will release the full trial results at an industry conference in the US at the end of the month. The shares will probably surge again or fall again and investors' wild ride will continue.
Australia's medical researchers do some extraordinary work, but as a nation we have a poor record of capitalising on these innovations, with much of the intellectual property and growth ending up overseas.
With ResMed, Sirtex and others like them, Australia will have a thriving biotech sector, but only if investors hold their nerve.
Cash splash
A year ago, Tony Abbott and Joe Hockey were telling us that we were in the midst of a budget crisis in urgent need of fixing.
This year, they have a different message - spend, spend, spend.
The Government wants Australia's small businesses to spend the country's way back to prosperity.
Starting immediately, small businesses can get generous tax concessions on any business equipment they buy up to the value of A$20,000. And they can claim as many times as they like.
But it remains to be seen whether Australia's small business owners spend on things that will actually help them grow their businesses and the economy, or nice things they'd like to have.
A Harley-Davidson to round up the sheep? As long as it costs less than A$20,000.
And what about that luxury car you'd like to buy for your business? That would have to cost more than A$20,000, surely. Not if the dealer took the wheels off and took out the leather seats, one commentator suggested. You can go back and buy them later - and claim the tax concession for them too.
Some of these ideas probably won't be legal, but they show how people are planning to use their tax concessions.
Shares in retailers including Harvey Norman and JB Hi-Fi jumped as investors reckoned small business owners would rush in to buy new laptops, tablets, and why not pick up a new coffee machine while they're at it?
Of course it was only a matter of hours before retailers began dreaming up campaigns to get small businesses opening their wallets.
The day after the Budget was handed down, Sydney's Wentworth Galleries was telling small businesses to take advantage of the tax break and splash out on a bit of art.
"Art is an integral part of business presentation and operation for many of our clients," the gallery said, somewhat hopefully.
They didn't explain how a painting on the wall will improve productivity or get the economy ticking along.
This is the risk with these tax concessions. Small businesses are being induced to make reckless spending decisions that in some cases they won't be able to afford and to buy things they don't really need.
These measures will cost the Government A$1.8 billion, at a time when the budget is under pressure.
And they won't have much to show for it, except for a lot more imported electronic goods that will eventually end up in landfill.
