Where Do Public Market Investors Think Long Term Returns Are Going To Be?

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BSCC – Panel | Investment in Healthcare – where the professionals are investing.

Investor Insights

At the British-Swiss Chamber of Commerce Frontiers in Healthcare Conference, Mary Clark, Managing Director at Optimum Strategic Communications chaired the Buyside Investor Panel discussing the latest investment trends in healthcare. The panel included Gavin MacGregor, Portfolio Manager – HBM Partners, Stefan Blum, Fund Manager – Bellevue Asset Management, Dr Terence McManus, Portfolio Manager – J. Safra Sarasin

How have your company’s operations been impacted through the pandemic and what has become the new normal?

  • Virtual meetings with the management team of companies you are invested in or are looking to invest have worked really well.
  • It has been very easy to arrange meetings which can be very efficient and productive. It is much easier to get CEOs or CFOs to join calls along with other members of the management teams.
  • Despite initial worries on how teams will work remotely, moving to a virtual world has proven to bring geographically spread teams closer together.
  • However, investor believe that the virtual medical conferences don’t work as well. In person attendance provides valuable insights into emerging data and trends as well as the opportunity to interact with the medical community. This is hard to replicate online.
  • Certainly, digital meetings are here to stay, although investors are looking forward to meeting people in person towards the end of the year.

What are the interesting areas for investment?

  • Healthcare has been a good defensive investment throughout the pandemic.
  • Digital health has benefited from the pandemic with accelerated growth that would otherwise take 3-4 years to achieve. This growth is expected to continue with the sector being a very promising investment area.
  • Non-Covid investments centred around elective procedures have suffered because of the system being overwhelmed by Covid.
  • Many therapeutic areas are producing promising drug candidates including oncology, autoimmune diseases, the nervous system. Most promising are companies developing tools to accelerate R&D, including genomics, proteomics and AI software for drug discovery amongst others.
  • Gene editing and liquid biopsies for cancer diagnostics are very promising areas that have progressed significantly in the past year.
  • As therapeutics become more complex smaller biotechnology companies as well as big cap players will turn to expert CROs and manufacturers for subject matter expertise and time saving. These two areas are less “exciting” traditionally but cannot be ignored as they will play an increasingly important role in the whole process of delivering existing and new drugs to patients.

Will the hot financing environment continue?

  • 2020 was an exceptional year for the biotech and healthcare industry with a significant increase in the number of IPOs and capital invested in private companies alike. Most of these IPOs have been successful. The trend will continue, albeit with less intensity, following the end of the pandemic.
  • Going forward the outlook is very positive for healthcare although the market will become more selective. Valuations are unlikely to stay at the present levels across the board. This will be followed by increased M&A activity with big pharma targeting smaller biotech.

What is the top tip for companies that want to meet you?

  • Consistent and concise messaging when meeting with potential investors is very important. Keep the story simple, don’t try and complicate it or think you need to communicate a new strategy in every meeting.
  • A mission and vision coupled with strong patient data that delivers clear clinical benefit – be sure to communicate the value inflection points that you will deliver.
  • Commercial stage companies need to demonstrate market potential and to show proof of market traction. This includes clinician willingness to use, payor appetite to reimburse and the potential distribution channels, inventory management etc. Investors want to see experienced management who have been through the process and understand it.