Business is still booming in the biotech sector…Over the past year, we’ve seen three huge buyouts occur in the Big Pharma/biotech area…

It started in January, with the news that Pfizer (NYSE: PFE) would shell out $68 billion to buy Wyeth (NYSE: WYE).

And things really got rolling this week, with the news that Merck (NYSE: MRK) will acquire Schering-Plough (NYSE: SGP) for $48 billion and that Roche and Genentech (NYSE: DNA) have finally concluded protracted negotiations that will see Roche buy the biotech superpower for $47 billion.

Total value of done deals: $163 billion. And in a market where access to capital has supposedly dried up.

The question is: Could these Big Pharma mergers signal a shift in sentiment and a bottom for the broader stock market?

If you’re looking for a simple, one-word answer… no.

But if you don’t take your investment advice from such in-depth, hard-hitting features as the “Lightning Round,” I invite you to keep reading… The Credit Is There… But Only For The Right Deal

There’s no doubt that it’s tough to get credit these days. But as the merger deals above show, capital is clearly available for the right deals.

For example, in order to finance its deal with Genentech, Roche issued nearly $33 billion in notes. In addition, Pfizer received over $22 billion in loan commitments from various banks to complete its transaction. And similarly, J.P. Morgan (NYSE: JPM) slapped down $8.5 billion so Merck could fund its deal with Schering-Plough.

Again, this has occurred during one of the most fear and panic-ridden periods in stock market history. And it’s come despite frequent comparisons of the Depression Era. Listen to the media too much and you’d expect to see the world in a grainy, brown hue every time you look out the window.

Don’t get me wrong here: I’m keenly aware that the economy is in bad shape. No one has ever accused me of being a Polyanna. But my point is that it’s not necessarily all doom-and-gloom (as some would like you to believe).

These healthcare/biotech mergers indicate the beginning of a thaw in credit markets and hopefully the start of a healing process for the markets. Notice that I’m not calling it a “bottoming process” because as I said last week, I do believe we’ll see new stock market lows.

But as more deals get done, investor and lender confidence will slowly return to the market. And I do think more acquisitions are imminent - particularly within the biotech sector… The Biotech Sector - A Wave of Consolidation

The biotech sector is likely in store for a wave of consolidation. While the above-mentioned Big Pharma companies have boosted their pipelines and created massive biopharma companies with their acquisitions, there are still many pharmaceutical companies that desperately need to fill their pipelines.

And that bodes well for biotech - particularly when you consider that the largest biotech company after Genentech is Amgen (Nasdaq: AMGN), which boasts a market cap of $48 billion.

After that, Gilead Sciences (Nasdaq: GILD), which just announced a $1.4 billion takeover of CV Therapeutics (Nasdaq: CVTX), is next at $40 billion. Then the market thins considerably, with only three companies that have market caps over $10 billion and 11 companies with market caps of $1 billion or more.

For example, Merck could buy Biogen (Nasdaq: BIIB) and Genzyme (Nasdaq: GENZ) for less than it cost the firm to buy Schering-Plough.

The point is: Even though the biotech sector has outperformed the S&P 500 during the bear market, many biotech stocks have become cheap.

In fact, pharmaceutical companies wouldn’t even need to raise capital to buy a BioMarin (Nasdaq: BMRN), or Xcelerated Profits Report portfolio member Medivation (Nasdaq: MDVN) and many others like them.

While no industry is truly immune to financial pressure, biotech is faring better than most.

Celgene Corp. (CELG) recently “warned” that its earnings per share will only grow by 20% in the first quarter. It’s considered a warning because Wall Street analysts expected 25%. Meanwhile, there are probably 1,000 CEOs that would sell their soul to report 20% growth in the first quarter.

According to business intelligence firm IBISWorld, biotech revenues are expected to grow by more than 10% in 2009.

In certain areas of the country, the biotech industry is helping to stabilize local economies. In the battered San Francisco Bay Area, South San Francisco is holding up relatively well thanks to the large number of biotech companies in the city.

“Biotech is one of the few growth industries in California, and it will continue to grow,” Michael Lappen, South San Francisco’s economic development coordinator, recently told the San Francisco Examiner.

South Florida is ground zero for the real estate collapse. But recent efforts to recruit biotech companies are paying dividends. Biotech companies increased their recruitment efforts by 5.5% in the sunshine state. Nationwide biotech companies added 27,000 new jobs in February. That compares to losses of 101,000 jobs from the private sector during the month, according to the U.S. Labor Department.

Moreover, in the current recession, the S&P Biotech Index is down, but it has lost only half as much as the S&P 500, which is kind of remarkable in that the sector is considered risky.

Last year, biotech was one of the market's top-performers (it fell, too, but not nearly as far as most stocks). Now, the industry is lighting up. Already in 2009, we've seen four takeover deals hand shareholders an average 85% gain.

George is ecstatic. "Even crappy drugs are fetching enormous premiums in this market," George told his subscribers last week.

Biotechs in general are only up about 20% from their lows. Meanwhile, the average gain on a biotech stock index during a biotech bull market is 566%. So don't worry you've missed it already.

Actually, as I'll show you, I think now is a perfect time to buy.

Earlier this month, the Wall Street Journal reported, "An atypically large number of [biotech] companies are down to their last few months of cash."

Biotech firms rely on investors to finance their futures. But investors have been clinging to their cash. So right now, a full 180 of the 370 publicly traded biotech companies in the U.S. are operating with less than a year of cash, according to BIO, an industry trade group. More than 100 have less than six month's cash on hand.

That sounds like terrible news for biotech investors. But it's exactly what we want to see.

The Wall Street Journal article coincided with the JPMorgan biotech conference. The first JPMorgan biotech conference was held in 1991. "The mood of that conference was that there will never, ever be another biotech IPO again in the history of the world," an attendee recalled. At that time, the Datastream Biotech Index was in the midst of a four-year bull market. The entire index soared over 1,000%.

This time around, many biotech stocks won't survive. They'll simply run out of cash. But others – like George's pick, Indevus – will be bought out for huge premiums. Indevus shareholders collected a 45% premium to the market price. (George set up a trade that allowed he readers to grab a 70% gain.)

Biotech is way overdue for a massive boom. And with over half of the biotech companies on the stock market in danger of running out of cash, we have to be near the bottom.

Will Malthus be denied --- yet again? “I think I may fairly make two postulata. First, That food is necessary to the existence of man. Secondly, That the passion between the sexes is necessary and will remain nearly in its present state. These two laws, ever since we have had any knowledge of mankind, appear to have been fixed laws of our nature, and, as we have not hitherto seen any alteration in them, we have no right to conclude that they will ever cease to be what they now are, without an immediate act of power in that Being who first arranged the system of the universe, and for the advantage of his creatures, still executes, according to fixed laws, all its various operations. ... Assuming then my postulata as granted, I say, that the power of population is indefinitely greater than the power in the earth to produce subsistence for man. Population, when unchecked, increases in a geometrical ratio.” Because population grows at geometric progression while production grows at arithmetic progression; as population outstrips food production, natural disasters, famines, wars shall occur to restore the balance between mankind and nature. What went right for the world? For one, productivity grew exponentially. On the other part, population growth, while exponential, is showing clear signs of defying the laws of nature - as economies mature, there is increasing evidence of falling fertility which arrests population growth. This together with forced and education based birth control, has somewhat slowed population growth from what it could have been. While population growth is restrained from a peak growth rate, increasing longevity does mean a larger standing army and thus a permanent increase in demand. On the demand side, while resources are finite, the voracious capacity to consume is not; both manual intervention and a Darwinian response by humanity may help delay the Malthusian correction; in the mean time science shall answer the challenge of increasing productivity to sustain the masses. On the supply side, energy is the fuel which fires the engine of industrial growth. Food is the fuel which fires people; without food there are no people; no demand. On health care, I personally find the Biotech industry utterly fascinating; of course I know nothing about the technical side of things, but I do follow the industry and its pipeline drugs closely from an investor perspective. Humans have such a desire to live in perpetuity, be it through life extensions or reincarnations; an industry which tries to satisfy the human quest for immortality must succeed. That aside, I have always wondered whether an answer to the age old Indian epics lies in Biotech; as in is immortality or reincarnation simply a genetic legacy explained; did Rama truly live for an epoch through advanced medicine or is it simply living through passage of a genetic legacy (with death being the consequence of the maternal line being ultimately extinguished); or hybrid beings (mythological beings like Garuda) a genetic possibility. Ultimately science will provide energy alternatives; science will also provide new technology which shall usher in the next green revolution; so too it shall provide drugs which shall continue to increase longevity.