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Thanks to the discovery of new drugs and technological developments, biotech has outperformed the overall market. The successful development of the COVID-19 vaccine was a great example of the industry’s ability to innovate.
Global inflation and sharp rises in interest rates have seen biotech company valuations plummet, keeping the sector under investors’ radar for the past three years. Three reasons why it’s worth taking a closer look at biotech now:
1) Biotech funding recovery
Biotech financing is showing clear signs of recovery and underscores the health of the sector. In the first quarter of 2024 in particular, public biotech financing doubled compared to the previous year, driven by numerous follow-on issues. IPOs are also slowly recovering from 2022 lows, indicating renewed investor interest.
2) Robust innovation
In recent years, breakthroughs have been approved in many areas. There have been significant advances in the treatment of obesity in particular with the introduction of GLP-1s. Gene and cell therapies are evolving in oncology, autoimmune and rare diseases. Artificial intelligence could further advance drug development through shortened development cycles and improved success rates.
3) Record-breaking M&A activity
M&A activity hit a record high in 2023 as major pharmaceutical companies increasingly look to smaller biotech firms to bolster their R&D pipelines ahead of upcoming patent expirations. A dynamic M&A environment creates attractive opportunities for experienced biotech investment managers.
Strong innovation pipelines, supported by better financing and a dynamic M&A environment, are paving the way for a long-awaited biotech revival. Despite short-term macroeconomic headwinds, the biotech sector offers significant growth potential, breakthrough innovation and attractive valuations.
There is still significant unmet need in many areas
Quelle: 1 World Health Organization; 2 Alzheimer’s Disease International; 3 JAMA Oncology, 2017;3(4):524-548; 4 PhRMA organization, Global Genes, 5 Estimate by UK Government, 2019
How Pictet-Biotech invests
Pictet-Biotech aims to identify companies that we believe are best positioned to succeed in an innovative sector. These companies research effective treatments for diseases that can save lives while also proving profitable for investors. More information about the fund
