US investors flock to UK biotech as sector delivers strong outperformance in a turbulent 2020
Biotech companies on London stock markets delivered market-beating returns in 2020 and attracted new investors looking for growth in a turbulent year, according to new analysis published today by the UK BioIndustry Association (BIA) and Radnor Capital Partners.
The study reveals 24 new American and 16 new European finance houses invested in the UK biotech sector for the first time, showing global recognition for UK innovation. 20 new UK institutional investors also entered the sector as other sectors of the economy were hit by the impacts of the pandemic. The findings show the importance of including biotech and healthcare in investment portfolios as part of both risk management and growth strategies.
The analysis reveals the strong performance of the UK-quoted biotech sector in 2020:
• The combined share price of UK-quoted biotech companies was up 155% over the year. The sector had already been outperforming the market before the pandemic hit the UK and accelerated afterwards as other sectors declined
• Companies involved in diagnostics and COVID-19 treatments were the best performers (up 493% and 475%, respectively) and other sub-sectors including small molecule drug development (+286%), research tools and data (+153%) and cell and gene therapies (+149%) also performed exceptionally well
• £1,141m of fresh equity was raised by 51 individual companies, more than double the amount raised in 2018 and 2019 combined
• The sector has attracted new investors, led by those from North America (24 new investors, net trading inflow of £649m), UK Retail Execution Only (net trading inflow of £132m) and European investors (16 new investors, net trading inflow of £52m)
• Ten large UK institutions and ten smaller UK institutions have also invested in the sector for the first time
Steve Bates OBE, Chief Executive of the BIA said: “2020 was a year when biomedical innovation showed its true value, and it is great to see investors recognise that the UK has some of the best biotech companies in the world. Biotech and the broader healthcare sector are counter-cyclical in nature, meaning they can protect investors in periods of economic downturn and deliver asset growth due to the rapidly expanding global demand for better healthcare.
“With over £1 billion of fresh capital invested in 2020, biotech companies on the London Stock Exchange are ready for growth in 2021 and beyond, meaning life-changing treatments can be delivered to patients sooner and investors can see the many different ways in which our sector can create value.”
Iain Daly, Director & Co-founder, Radnor Capital Partners, said: “The breadth and uniformity of biotech’s outperformance in 2020 has been especially notable. The pandemic has sharpened investors’ minds around the structural tailwinds behind biotech and this can be seen by every sub-sector within biotech outperforming the broader market and not just those companies with specific exposure to COVID -19 diagnostics and therapies. We can also see this through the increased level of investor participation, across the majority of investor types, in equity fundraising and secondary market trading.”
Notes to Editors
1. For more information please contact Jack Fellows, Communications and Media Manager on [email protected] or 07825942934
2. To read the analysis, please follow this link.
3. The analysis was performed by Radnor Capital Partners and commissioned by the UK BioIndustry Association
4. The index classifications and the constituents have been curated by Radnor, in partnership with the BIA, and are calculated and maintained via the FactSet custom index methodology on both an Unweighted basis and a Market Cap Weighted basis. Figures shown in this press release are of the Unweighted analysis.
5.The report does not provide investment advice or seek to promote any individual financial product