Investing in UK biotech has never been more attractive
Biotech stocks have never been a more attractive destination for investors. As traditional sectors continue to suffer with the market disruption brought about by COVID-19, biopharma and healthcare is one of the few economic sectors to have largely escaped the global downturn.
A new guide by the BioIndustry Association, with support from the London Stock Exchange, lifts the lid on this exciting sector and shows the opportunity for investors to reap financial returns from investing in UK biotech as part of their Environmental, Social and Governance (ESG) strategy.
UK biotech was outperforming the broader market before COVID-19 hit, since then its relative performance has been stronger still and there have been many new investors entering the sector on the London Stock Exchange. This 30-year old industry now includes mature, revenue-generating companies, as well as innovative start-ups building new technologies, and new business models.
The long-term returns (10 years) of biotech have outperformed other sectors, including pharmaceuticals and tech, in both venture capital and public markets. The combined share price of the UK quoted biotech sector is up 133% against the FTSE-100 in the past year and 124% in the past five years. Quoted companies involved in developing COVID-19-related technologies are up 545% in the past year.
Key trends which will support the sector in the future are:
- The UK biotech sector holds many of the solutions to today’s most urgent global challenges, from fighting pandemics and climate change to building sustainable energy and food sources.
- The sector enjoys strong government support in many countries and with record levels of private and public investment poured into biotech over the last decade, biotech’s position as a key strategic sector is only set to continue after the COVID-19 pandemic.
- Large, multinational pharmaceutical firms that distribute most medicines across the globe are developing fewer new drugs in-house. This is making them eager buyers of biotech assets, which account for a growing majority of the overall drug development pipeline.
Opportunity on your doorstep: A guide to investing in the UK biotech sector, is to help investors from the biggest institutions down to individuals planning for their retirement to understand the sector, including its diverse business models, the R&D process and the risks and benefits.
Steve Bates OBE Chief Executive of the UK BioIndustry Association said: “The UK biotech cluster is the third largest in the world, innovative companies supported by a world class research base are developing the next generation of medicines and treatments for patients. It is a sector supported by governments across the world and its standing has only increased as it helps find solutions to the COVID-19 pandemic.”
“As more and more investors are heading to biotech companies listed on the London Stock Exchange, there is a real opportunity for investors to make real returns in a sector that was outperforming the broader markets pre COVID-19 and has only gathered further momentum since.”
Denzil Jenkins, Interim Chief Executive Officer of the London Stock Exchange plc said: “London Stock Exchange is honoured to support this vital industry and those wishing to invest in it. The Biotech and associated Healthcare sector is a significant component of the London equity market with, currently, 109 companies listed on our Main Market and AIM that, between them, have a cumulative market value of £244 billion.
“The extraordinarily agile response by the industry to the pandemic, both in terms of vaccine development and production of testing and diagnostic equipment, has been nothing short of astonishing.”
Notes to Editors
- Share price analysis by Radnor Capital Partners on behalf of the BIA, based on an unweighted custom index of biotech companies quoted on the London Stock Exchange compared to the weighted FTSE-100 index, correct as of 1 September 2020.
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- The report does not provide investment advice or seek to promote any individual financial product.
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About the BIA
Established over 25 years ago at the infancy of biotechnology, the BioIndustry Association (BIA) is the trade association for innovative life sciences in the UK. Our goal is to secure the UK's position as a global hub and as the best location for innovative research and commercialisation, enabling our world-leading research base to deliver healthcare solutions that can truly make a difference to people's lives.