Even as biopharmaceutical firms continue to deliver exciting medical advances, the sector’s performance has been mixed this year, with some firms negatively impacted by rising rates, clinical trial setbacks and regulatory uncertainty and others benefiting from strong free cash flows. Portfolio Manager Dan Lyons and Research Analyst Luyi Guo explain how investors might gain exposure to the sector’s secular growth opportunities, while minimising downside risks.

Key takeaways

  • The healthcare sector continues to make significant advances in medical research, including recent breakthroughs in breast cancer and multiple myeloma. That can lead to strong revenue growth for firms that successfully develop and/or commercialise these therapies.
  • There are also significant risks, with 90% of drugs that begin human clinical trials never making it to market. Rising interest rates, regulatory uncertainty and drug patent expirations can be further headwinds.
  • Taking the long view on a drug’s lifecycle can help minimise risk and allow investors to take advantage of healthcare’s unique growth drivers.

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