Biotechnology firms to draw investors post-pandemic
The healthcare sector has outperformed the broad equity market during the coronavirus crisis as investors reward companies with advanced research to address COVID-19 and could continue to invest in biotechnology firms after the pandemic ends, Janus Henderson’s portfolio manager Andy Acker said.
Although healthcare stocks tended to act more defensively during an economic contraction, in these circumstances, there was not a steady stream of surgeries or doctor’s visits that were expected to help prop up healthcare companies. On top of that social distancing and preparations for a surge of coronavirus patients sidelined many of these routine activities, he said.
However, investors continued to reward those companies which were using innovation to aggressively develop vaccines or treatments for COVID-19, while firms helping to facilitate remote medical care were also gaining favour.
“Investor focus on these trends has accelerated due to the crisis but could last long after the pandemic ends, in our view,” Acker stressed.
“Although we are sceptical of the rally in certain biotechnology companies making headlines as it relates to the virus, we believe investor focus on the sector’s advanced technology could last long after the pandemic ends.”
At the same time, investors acknowledged that tele-medicine services were taking off as both Government and insurers encouraged the technology’s use as an efficient and safe means to treat influenza and potential COVID-19 infections, easing the burden on the healthcare system.
Although the advances were encouraging, Acker warned that investors should keep perspective and stressed it was very likely that we would not have a vaccine for the general population for at least 12 to 18 months.
“We think investors should expect continued volatility in the coming months. However, we believe the rapid pullback of equity prices has created some compelling opportunities,” he said.
“Longer term, we feel that the sector’s unprecedented innovation addressing unmet medical needs will lead to attractive growth – a point we think is now being driven home by the global race for a coronavirus cure.”
AUTHOR
Oksana Patron
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
