The biotechnology sector has become a hunting ground for hedge funds on the look out for bargain stocks, according to a report by The Financial Times.

After a sharp selloff which has seen a Nasdaq index of biotech stocks shed almost a third of its value since hitting an all-time high in August last year, managers are betting that the sector now provides investment opportunities.

The report says that some managers believe that biotech stock have fallen too far when drug development prospects are taken into consideration and are "buying up stocks on the cheap".

London-based Infinity Investment Parters, which manages $1.5 billion in assets has launched and fund aimed specifically to focus on the life sciences sector, which founder Michele Gesualdi is quoted as saying is "as cheap as it has ever been".