Page 22 - DIY Investor Magazine - Issue 28

PAGING DR ALPHA This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary. The pandemic has boosted secular growth drivers behind healthcare as an investment theme...writes William Heathcoat Amory Adversity promotes innovation. World War II provided the impetus for many huge technological leaps forward and so it is that the pandemic has led to what could be huge leaps forward in the world of healthcare. Funded by emergency government programmes, Pfizer- BioNTech (and later, Moderna) successfully developed the first mRNA vaccine licensed for use in humans. Up until that point, no vaccine using this new technology had ever been approved. It is entirely possible that the developments pioneered by BioNTech and Moderna could usher in a new era for vaccines and drugs. However, lockdowns have prompted consumers, businesses and governments to consider new ways of doing things. They have also opened the window to new ways that healthcare providers can deliver their services, and potentially brought forward industry trends by many years. ‘INVESTORS ARE ONCE AGAIN LOOKING AT THE BIOTECHNOLOGY & HEALTHCARE SECTOR, WHERE INNOVATION IS AT FEVER PITCH’ It is no wonder therefore that investors are once again looking at the biotechnology & healthcare sector, where innovation is at fever pitch. During 2020, the FDA approved 53 novel drugs, which is good news for investors as well as for society.Whilst drug pricing is a hot topic politically, one might argue that the pandemic has shown us all the value to society of having a strong and dynamic drug-discovery ecosystem. As Boris Johnson famously stated (and then retracted) “the reason we have the vaccine success is because of capitalism, because of greed, my friends”. Despite the unfortunate language, we all know what Boris is talking about. The upside financial returns on successful drug development fuel innovation. As such, we believe that pressure for controls on pricing is less likely to occur after the pandemic than it was before it. International Biotechnology Trust (IBT) invests in some of the most innovative companies in the biotech sector. The team behind IBT at SV Health Managers believe that double-digit annual returns are achievable from their sector over the long term. ‘DOUBLE-DIGIT ANNUAL RETURNS ARE ACHIEVABLE FROM THEIR SECTOR OVER THE LONG TERM’ They take a measured approach to investment, aiming for a diversified portfolio of quoted and unquoted investments in companies aiming to address a clear medical need, and which have financial strength. The team bring a detailed understanding of the science behind companies in the portfolio, not to mention the industrial processes behind product research. A strong contributor to returns during 2020 was IBT’s exposure to private companies. Investments here are led by Kate Bingham (who took time off from investment management during 2020 to chair the UK’s Vaccine Taskforce), and her team offer exposure to early-stage companies with explosive growth potential. DIY Investor Magazine | Apr 2021 22