Innovation in healthcare: at a sector sweet spot?



​​The healthcare sector is experiencing a rapid pace of innovation, a trend that Andy Acker, Portfolio Manager in the Global Life Sciences Team, says is likely to continue in 2019 to the potential benefit of investors.

What do you think are the key themes likely to shape markets in 2019?

We believe innovation will be a driving force for healthcare stocks in 2019. Over the past two years, the US Food and Drug Administration (FDA) approved more than 90 novel therapies. These products, still early in their launch phase, could drive industry growth for years to come.

Many new therapies represent revolutionary advances in medicine. Immuno-oncology medicines, for one, harness the immune system to target and attack cancer cells, often with impressive results. Exciting advances are being made in gene therapies that address rare and debilitating diseases. The first gene therapy was approved in the US in late 2017, and we expect additional approvals as soon as next year. Advances are also being made in medical devices, where the first integrated continuous glucose monitor for diabetes management recently won FDA approval and positive clinical trial data were presented for mitral valve repair and drug-eluting stents. Finally, a consolidation in services is leading to more integrated healthcare services companies.

Where do you see the most important opportunities and risks within your asset class?

Drug pricing reform in the US remains a concern for the healthcare sector, as President Trump has made lowering consumers’ out-of-pocket drug costs a priority. Amazon’s acquisition in June of an online pharmacy could also lead to disintermediation of the drug-supply chain. Broadly, we believe reforms that remove inefficiencies and improve patient affordability are good for the system in the long term. As always, we also have to think about the binary nature of drug development. For as many drugs that get regulatory approval, a multitude of others never make it out of clinical trials, leading to volatility.

How have your experiences in 2018 shifted your approach or outlook in 2019?

In our opinion, remaining disciplined on valuation in 2018 was critical to managing downside volatility. During the summer, we saw a high level of investor enthusiasm for early-stage biotechnology companies, even though fundamentals did not always support elevated valuations, in our opinion. When the broad equity market declined in October, many of these stocks had the farthest to fall. Consequently, we remain committed to taking a balanced approach, investing across the healthcare sector’s major subindustries, market capitalisations and geographies.

But overall, our enthusiasm for the sector has never been higher. In addition to companies delivering medical breakthroughs, regulators globally have shown their commitment to quickly bringing treatments to market for patients with high, unmet medical needs. With new drugs and medical devices in the process of launching — and major patent cliffs largely behind us — we believe this is a sweet spot for many areas of the sector.

Which themes have the potential to redirect markets in 2019? Download our Infographic to find out


Gene therapy: the insertion of normal DNA into cells with a genetic defect. The normal DNA replaces or alters the functioning of the target cell which is responsible for disease.

Mitral valve repair: cardiac surgery to treat or replace diseased or narrowing mitral valve in the heart.

Drug-eluting stent: a mesh scaffold that can prevent blocked arteries. It is inserted into a diseased artery and releases a drug to prevent cell proliferation and eventual artery blockage.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

For promotional purposes.

Important information

Please read the following important information regarding funds related to this article.

Janus Henderson Horizon Biotechnology Fund

The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Henderson Management S.A. Any investment application will be made solely on the basis of the information contained in the Fund’s prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the Fund’s prospectus and key investor information document before investing. A copy of the Fund’s prospectus and key investor information document can be obtained from Henderson Global Investors Limited in its capacity as Investment Manager and Distributor.

Issued by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Past performance is not a guide to future performance. The performance data does not take into account the commissions and costs incurred on the issue and redemption of units. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

The Fund is a recognised collective investment scheme for the purpose of promotion into the United Kingdom. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.

Copies of the Fund’s prospectus and key investor information document are available in English, French, German, and Italian. Articles of incorporation, annual and semi-annual reports are available in English. Key Investor document is also available in Spanish. All of these documents can be obtained free of cost from the local offices of Janus Henderson Investors: 201 Bishopsgate, London, EC2M 3AE for UK, Swedish and Scandinavian investors; Via Dante 14, 20121 Milan, Italy, for Italian investors and Roemer Visscherstraat 43-45, 1054 EW Amsterdam, the Netherlands. for Dutch investors; and the Fund’s: Austrian Paying Agent Raiffeisen Bank International AG, Am Stadtpark 9, A-1030 Vienna; French Paying Agent BNP Paribas Securities Services, 3, rue d’Antin, F-75002 Paris; German Information Agent Marcard, Stein & Co, Ballindamm 36, 20095 Hamburg; Belgian Financial Service Provider CACEIS Belgium S.A., Avenue du Port 86 C b320, B-1000 Brussels; Spanish Representative Allfunds Bank S.A. Estafeta, 6 Complejo Plaza de la Fuente, La Moraleja, Alcobendas 28109 Madrid; Singapore Representative Janus Henderson Investors (Singapore) Limited, 138 Market Street #34-03/04 CapitaGreen, Singapore 048946; or Swiss Representative BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich who are also the Swiss Paying Agent. RBC Investor Services Trust Hong Kong Limited, a subsidiary of the joint venture UK holding company RBC Investor Services Limited, 51/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, Tel: +852 2978 5656 is the Fund’s Representative in Hong Kong.

Information on this document is on Janus Henderson Investors' best endeavours.

Specific risks

  • The Fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Fund.
  • If a Fund has a high exposure to a particular country or geographical region it carries a higher level of risk than a Fund which is more broadly diversified.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall.
  • If the Fund or a specific share class of the Fund seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
  • The Fund's value may fall where it has concentrated exposure to a particular industry that is heavily affected by an adverse event.
  • Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses.
  • Shares of small and mid-size companies can be more volatile than shares of larger companies, and at times it may be difficult to value or to sell shares at desired times and prices, increasing the risk of losses.

Risk rating


Important message