The biotech that makes the portfolio shine

The biotech that makes the portfolio shine

The coronavirus pandemic has turned the spotlight on the sector that grows at a rate of 7.5% a year and that could reach a value of 700 billion dollars in 2025


There is a sector that has been showing disruptive force since the beginning of the year. A world that continues to grow steadily and whose success was foretold by Steve Jobs when he said the following words:"I think the biggest innovations of the twenty-first century will be the intersection of biology and technology. A new era is beginning".

We are talking about biotechnology and therefore about all the companies involved in developing new drugs with the aim of improving the life and health of the population.

 This year, in particular, the spotlight on the combination of technology and biology was the coronavirus pandemic and more specifically the race to find a cure or a vaccine against Covid-19.

But the virus was merely an accelerator, a driver that was added to the others that  were already leading the industry, such as Big data, the aging population and hi-tech applications in the medical field, without taking into consideration the huge investment in research and development (R&D), which has grown strongly in the last 15 years.

If we focus on biotech companies, the industry shows a R&D percentage of revenues above 40%, which is significantly higher than the market average. “And today, in times of Covid, research has become the priority of all countries – explains Matteo Avigni, portfolio manager of Pharus – But this greater awareness of the importance of investing in research cannot be forgotten, even when the virus will be defeated. This makes us optimistic about the future of biotechnology, which should continue to grow at a rate of 7.5% a year until 2025, reaching a market value of over 700 billion dollars. Moreover, in our opinion, the technological development we are witnessing cannot be separated from the improvement of the living conditions of the population, which is bound to go through biotechnological development".

In the 1990s, the world of medical devices had similar characteristics to the current biotech, with a very strong growth in investment in research and development. Today, the sector generates profits in constant growth. "This gives us good hope for the future of biotech - adds Avigni - which is a very heterogeneous sector, that is composed of several sub-sectors that all show a compared to the world of traditional medicine, that is the frontier development component in the search for new drugs unabling to treat diseases that do not haveany cure today. And the presence of heterogeneity is an added value to the portfolio. Being invested in different sub-sectors, in fact, allows us to take advantage of all the growth engines of biotechnology.”

The most interesting investment opportunities can be found especially in the United States, where 3 times more patents are generated in comparison to Europe. "Among the companies, we look carefully at Moderna, which is moving forward in the process of producing a vaccine against coronavirus, while in the subsector of oncology we closely follow Mirati Therapeutics, which is one of our top picks within Pharus Biotech strategy.” concludes Avigni.

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